The miserable Alcoa Inc.
See it for yourself.
Aluminum stocks are soaring 4% on average today, yet Alcoa declines by a few cents.
Last Friday, 27000 July 15 Calls were bought. You might just wonder who would have so much cash to buy those contracts… Do not be surprised if there are even more contracts being bought today. Big boys are buying derivatives to maximize their profits from Alcoa. If you cannot stand this manipulation and volatility, Alcoa Inc is not the stock for you.
Standard Chartered reports that Aluminum is stable at this price of 94cts/lbs. Note that this is significantly higher than the average of 88cts/lbs last quarter that Alcoa had.
Another positive note for Alcoa Inc, is the strengthening dollar. Last quarter, Alcoa did not meet expectations as the dollar was so weak. This quarter, the dollar has strengthened by 10%!
Demand for Alumina has increased. China and US manufacturing industries continue to expand albeit a slower pace. This coming earnings release, Alcoa might be able to post profits of 20cts EPS. At $13.30, Alcoa is trading at the lowest P/E ratio in the DOW 30 stocks. Bank Of America Corp, the second lowest stock is trading at 18X, while Alcoa is trading at 14X.
Stocks like Caterpillar, Dupont, Boeing are already trading at 20 - 25X forward P/E. Risky investors are still not convinced to add more Alcoa Inc to their portfolio. Guess we have to wait for that.
No comments:
Post a Comment