Just because a company is a leader in its given industry doesn't mean that it's immune to challenges. Lately, aluminum company Alcoa (NYSE: AA ) has had to learn this the hard way. Its stock price has sunk recently upon word that Moody's lowered its rating to "junk".
While Moody's admitted that Alcoa has been boosting its productivity and cutting costs, it cited macroeconomic factors like the recession in Europe and slow growth in China as strong reasons for the downgrade. However, there are other cracks in Alcoa's financial structure that might make a would-be long-term investor wary. In the video below, Motley Fool contributor Caroline Bennett looks at some additional reasons to stay away from Alcoa, at least for now.
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.