Dow Gains, but Alcoa Falls Short

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After spending most of the day in negative territory, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) made a late run to finish up 48 points or 0.3% as optimism about the beginning of earnings season seemed to take over late in the day. Following multiple reports last week about a slowing job market, Wall Street seemed happy to shift its focus elsewhere as earnings reports begin to roll in.

Alcoa (NYSE: AA  ) kicked off the quarterly reports in style, gaining 1.8% during the trading session, and reporting overall profit growth of 59% to $149 million or $0.13 a share, even as revenue continued to slide, falling 3%, on weak aluminum demand. Still, the manufacturer managed to lift earnings per share with growth in its downstream segment, which sells products such as aluminum wheels and aircraft parts. EPS topped expectations of $0.13 a share, but sales came in a bit short. Shares were down 1.3% in after-hours trading.

Elsewhere on the Dow, Coca-Cola (NYSE: KO  ) jumped 2% as separate reports reaffirmed the growth potential in the energy-drink industry. Wells Fargo said that energy drinks should push overall growth in the beverage industry while UBS put in its own vote of confidence in the industry, saying that Monster Beverage had strong upside potential in international sales. After hours, Monster, once thought of as a buyout target for Coca-Cola, also announced a $200 million share-buyback program. Shares of the energy-drink maker were up 4.7% today.

Johnson & Johnson (NYSE: JNJ  ) led the Dow laggards today, finishing down 1.1% after getting downgraded by JPMorgan Chase. Michael Weinstein dropped his rating from "overweight" to "hold," saying that the health-care giant's stock trades at an 8% premium to its intrinsic value and that he expects the company lower its guidance soon.  

Shares of General Electric (NYSE: GE  ) finished up 0.8%, but it sent Lufkin Industries, a maker of oil pumps and similar transmission products, up 37.6%, after agreeing to acquire it. GE will pay about $3 billion for Lufkin, a move that gives the conglomerate increased exposure to the fast-growing shale oil-and-gas industry, and will make GE Oil & Gas the company's third largest unit. The deal is expected to close in June.

Finally, outside the Dow, CEO Ron Johnson was finally ousted from J.C. Penney following one of the more tumultuous years in retail history. Johnson's brand revamp never took and cost more the company more than a quarter of its sales, and the retailer has already taken several steps to undo his decisions, such as bringing back markdowns. Former CEO Mike Ullman, who led the company for nearly seven years before being replaced by Johnson, will be back at the helm. Investors seemed uninspired by the decision, as shares were off 9.9% after hours.

Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Controlling about 15% of global production in this highly consolidated industry, Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160 billion by 2017. Based on this prospect and several other company-specific factors, Alcoa is certainly worth a closer look. For a Foolish investment perspective on this global giant simply click here now to get started.

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9/26/2016 3:19 PM
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