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Why Alcoa, Petroleo Brasileiro, and lululemon athletica Jumped Today

By Dan Caplinger – Mar 27, 2014 at 8:00PM

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On a relatively quiet day for the stock market, broad market indexes were little changed as investors waited for further direction on the geopolitical and global economic fronts. But these three stocks still managed to post solid gains Thursday. Find out more about what made these stocks soar.

Thursday's stock market action was relatively muted, with aimless trading resulting in only minimal losses for the Dow and S&P 500. Investors continue to fret about situations like the Ukrainian conflict and economic risk in China and other emerging markets, even as news from the U.S. economy continues to be encouraging. Despite losses for the broader market, Alcoa (AA), Petroleo Brasileiro (PBR -3.17%), and lululemon athletica (LULU 0.41%) celebrated positive news, and posted solid gains on the day for their shareholders.

Alcoa's Ultra ONE wheel. Source: Alcoa.

Alcoa jumped 6%, with the aluminum giant climbing after releasing its new Ultra ONE truck wheel. Alcoa says that the Ultra ONE cuts almost half the weight from similarly sized steel wheels, which can cut as much as 1,400 pounds from commercial truck weights and thereby save fuel and allow larger hauls from the same equipment. The move represents just one direction of Alcoa's attempt to make itself more relevant in a wide array of different applications, ranging from ground transportation to aircraft and other weight-critical industries. Finding niche uses for aluminum is important, because from a longer-term perspective, aluminum prices remain at their lowest levels since 2009. The industry likely needs a broader shakeout before the fundamentals can improve enough to justify big moves forward for Alcoa and its peers.

Petrobras gained 8% on a strong day for the Brazilian stock market generally. Brazil's energy giant has been under pressure for years as subsidized gasoline prices within the South American emerging-market giant have weighed on profits and led many investors to question whether they'll ever reap the full benefit of Petrobras' big finds off the Brazilian coast. Yet, with the company's management team telling analysts at UBS that it doesn't plan to raise capital through either equity or debt offerings, investors are taking some comfort from what could be a stabilization in the Brazilian market after a long period of falling currency exchange rates and threats of further debt downgrades.

Yoga-apparel giant lululemon rose 6% after an earnings report that included some troubling news, but which pointed to a potential turnaround for the company. Lululemon said that same-store sales dropped 2%, with gross margins falling three full percentage points. Yet, new CEO Laurent Potdevin took a firm grip on the company's reins, providing necessary leadership for a company that has been plagued by miscues at the executive level and substantial turnover recently that has hampered its strategic vision. With rivals like Gap lurking in the wings and hoping to cannibalize business from the company, lululemon needs to move past its 2013 mistakes and set itself up for a more promising future.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica and Petroleo Brasileiro. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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