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4-Star Stocks Poised to Pop: Allegheny Technologies

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 8:07PM

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Market-trouncing returns could be written in this 4-star.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, titanium products maker Allegheny Technologies (NYSE:ATI) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Allegheny's business, and see what CAPS investors are saying about the stock right now.

Allegheny facts

Headquarters (founded)

Pittsburgh, Pennsylvania (1960)

Market Cap

$2.23 billion

Industry

Steel

TTM Revenue

$5.47 billion

Management

CEO L. Patrick Hassey (since 2003)

CFO Richard Harshman (since 2000)

Return on Capital (average last three years)

28.2%

Dividend Yield

3.1%

Competitors

Alcoa (NYSE:AA),

Titanium Metals (NYSE:TIE)

CAPS members bullish on ATI also bullish on

Freeport-McMoRan Copper & Gold (NYSE:FCX),

Vale (NYSE:RIO)

CAPS members bearish on ATI also bearish on

General Motors (NYSE:GM),

Citigroup (NYSE:C)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 1,056 of the 1,108 members who have rated Allegheny -- some 95% -- believe the stock will outperform the S&P 500 going forward. These bulls include zoagra and Foliobuilder.

In October, zoagra noted that Allegheny is basically priced for no growth and pays a solid dividend (which is the same today):

Although sensitive to the economic cycle, [Allegheny Technologies] stock appears oversold now that serious financial sector rescue is under way. Dividend yield is 3.1%, which happens to match current year and forward P/E ratio of 3.2. A solid growth stock for the next economic cycle.

In a more recent pitch from late last month, Foliobuilder shares that contrarian attitude:

Metals and ores, particularly steel prices, have plummeted the past few months along with freefall in most commodities. In addition the global slowdown and deteriorating business environment have decimated the price of this stock. I will start buying [Allegheny Technologies] now to profit from the inevitable rebound that should occur at some point during the next year.

What do you think about Allegheny, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Titanium Metals is a Motley Fool Stock Advisor pick. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

Allegheny Technologies Incorporated Stock Quote
Allegheny Technologies Incorporated
ATI
$29.62 (2.46%) $0.71
Alcoa Inc. Stock Quote
Alcoa Inc.
AA
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$51.97 (0.96%) $0.49
General Motors Company Stock Quote
General Motors Company
GM
$36.49 (-2.83%) $-1.06
Freeport-McMoRan Inc. Stock Quote
Freeport-McMoRan Inc.
FCX
$29.98 (-2.11%) $0.65
Rio Tinto plc Stock Quote
Rio Tinto plc
RIO
$61.16 (0.59%) $0.36
Titanium Metals Corporation Stock Quote
Titanium Metals Corporation
TIE.DL

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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