The rally in aluminum was triggered by reduced supply in the first half of 2020 because mining activities were temporarily halted due to COVID-19 concerns. Owing to current increased demand for aluminum for construction and from the electronics, aerospace, industrial and packaging markets, the metal’s prices hit their two-year high of $2307.50 per ton on March 26.
This upward price trend is expected to continue, driven by the infrastructure and electric vehicles (EV) markets. President Biden’s $621 billion plan for improving transportation infrastructure and resilience is likely to be a boon to the aluminum industry in near future. Furthermore, the global aluminum market is expected to grow at a CAGR of 3.4% over the next six years to hit $103.80 billion by 2026.
Aluminum Corporation of China Limited (ACH)
Headquartered in Beijing, China, ACH is an aluminum producer with operations in bauxite and coal mining, alumina refining and primary aluminum smelting. The company operates through five segments—alumina, primary aluminum, trading, energy, and corporate and other. ACH also acquires, manufactures, and distributes bauxite mines and limestone ore, and provides engineering project management, and research and development services.
For the third quarter (ended September 30, 2020), the company’s operating revenue was RMB4.42 billion, which represented an improvement of 10.1% year-over-year. ACH’s operating profit has increased 107.3% year-over-year to RMB1.11 billion. Its net profit has increased 300.6% year-over-year to RMB4.16 million. Also, ACH’s comprehensive income came in at RMB871.86 million for the third quarter, up 520.47% year-over-year. Its EPS has increased 566.7% year-over-year to RMB0.020.
Analysts expect ACH’s consensus revenue estimate to be $29.16 billion for its fiscal year 2021, ending December 2021, which represents a 2.8% rise on a year-over-year basis. Also, the stock’s EPS is expected to grow 218.7% per annum over the next five years. The stock has gained 117.2% over the past year and closed yesterday’s trading session at $10.61.
ACH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth, Value, Momentum, and Sentiment. We have also graded ACH for Quality and Stability. Click here to access all ACH’s ratings.
ACH is ranked #1 of 6 stocks in the B-rated Aluminum industry.
Alcoa Corporation (AA)
Headquartered in Pittsburgh, Pennsylvania, AA engineers and manufactures lightweight metals, with a major focus on automotive and commercial transport, air and space travel, and industrial and consumer electronics products. AA produces bauxite, alumina and aluminum of various cast and rolled products. In addition, it owns hydro power plants that produce and sell electricity to the wholesale market, large industrial consumers, distribution companies, and other generation companies.
In late March, AA closed the sale of the rolling mill and associated assets near Evansville, Indiana. Also, Alcoa Nederland Holding B.V., a wholly owned subsidiary of AA, closed its offering of $500 million of senior notes on March 24. On March 23, AA announced that it is supplying sustainable aluminum for the wheels on the Audi e-tron GT, which represents the first vehicle to use metal from a revolutionary carbon-free technology.
AA is scheduled to release its fiscal 2021 first quarter financial results on April 15,after the market closes. AA’s total sales was $2.39 billion for the fourth quarter, ended December 31, 2020, which represents an improvement of 1.4% year-over-year. The company’s adjusted ebitda was $361 million, up 27.1% year-over-year. Its adjusted net income was $49 million, compared to a net loss of $218 million in the third quarter of 2020. Also, its adjusted EPS came in at $0.26 for the fourth quarter, compared to a loss per share of $1.17 in the third quarter.
A consensus EPS estimate of $0.73 for the next quarter, ending June 30, 2021, represents a 3750% rise year-over-year. AA also surpassed the consensus EPS estimates in each of the trailing four quarters. Its consensus revenue estimate of $2.59 billion for the next quarter represents a 22.5% rise from the prior-year period.
The stock has rallied 439.9% over the past year and 193.8% over the past nine months to close yesterday’s trading session at $31.55.
AA’s POWR Ratings reflect this promising outlook. The stock has a B grade for Momentum. In addition to the POWR Ratings grade we’ve just highlighted, one can see AA’s ratings for Value, Growth, Stability, Quality, and Sentiment here.
AA is ranked #3 in the same industry.
The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
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ACH shares were trading at $10.66 per share on Tuesday afternoon, up $0.05 (+0.47%). Year-to-date, ACH has gained 22.81%, versus a 8.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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