Alcoa Shares Continue to Rise
On Dec 3rd I talked up Alcoa Inc. (NYSE:AA) as slow mover, boring stock, but an investment to consider for would-be buyers. Since that time Alcoa shares have gained 21%, so much for boring.
WallStNation.com Sponsors - Become one Today
Alcoa (AA) shares are on fire today, adding another 4% and trading at $16.44, pushing closer to that 52-week high of $17.60.
THE POWER OF CRAMER
Yesterday (Jan 3rd) CNBC's Jim Cramer talked up Alcoa on Mad Money proclaiming the company as one of his three favorite Dow components for 2011 along with Intel (INTC) and American Express (AXP). Cramer said Aloca Inc. will be the top performer among Dow components this year, predicting the stock could rise 42% in 2011 to $22 as other metals companies could consider a takeover bid for the stock.
However last month when I mentioned Alcoa I was sold on comments made by Klaus Kleinfeld, the chief executive officer of Alcoa Inc. On Nov 17th Klienfeld said he expects the price of aluminum to rise in the next 10 years as demand exceeds supply, and that supply constraints will restrict aluminum production and all the new plants that are scheduled to open in the next few years will be needed. The company takes the view that global demand may grow by 6.5 percent a year, doubling total consumption by 2020, even if Chinese demand slows down. Be it that Alcoa holds the crown as the world's leading producer of aluminum, be it primary aluminum, fabricated aluminum or alumina -- I was sold on speculation of future growth and the possibility that aluminum prices could finally rise.
Friendly reminder, Alcoa reports Q4 2010 earnings next Monday (Jan 10th) and the Street expects 19 cents a share for Alcoa, which last year in the same quarter generated earnings of 1 penny a share.
Bottom line: The easy money has been made on Alcoa as it shares are now up 38% over the past three months. Should the company come out good on next week's call, the bullish trend will continue, and for once, Wall Street is beginning to believe.
Disclaimer: No positions in any of the securities mentioned in this publication.