Welcome back to the channel everyone, I’m excited to share with you updates on
a sector which I’m very bullish about as the macro factors stack up very nicely for them.
We are beginning to see Aluminium nearing record highs on supply disruptions.
Tight supply, strong demand and escalating tensions in Ukraine are pushing the price of
aluminium to its highest level since the global financial crisis, which is further fuelling
inflationary pressures. The metal, which is used in everything from electric vehicles to beer cans,
rose as much as 3.3 per cent to a 13-year high of over $3,236 a tonne. So in this video,
I bring you two top aluminium stocks which are well positioned to ride this bull run and charge
their way up to outperform the market. So make sure you watch till the end, to see which of
these 2 stocks deserve a place on your watchlist and let me know in the comments section below.
Aluminium is often referred to as solid electricity because of the large amounts
of power required to transform its key ingredient, alumina, into refined metal. And smelter capacity
losses in Europe now stand at more than 800,000 tonnes, while in China just under 3mn tonnes
of output was suspended last year due to power constraints and tough energy control regulations.
More capacity could be sidelined after local authorities in one of China’s most
important producing regions imposed strict lockdown measures due to a Covid-19 outbreak.
All of this is only pushing the price in one direction. That’s UP.
Goldman Sachs, for example, is forecasting that aluminum could surge to as much as $4,000 a ton
this year as "exceptional" demand for the metal meets constrained output from China,
which is rationing power and pinching production.
And if Russia's warfare should turn into an actual war, exports of aluminum from Russia
could get shut down entirely which could get the price per tonne to go ballistic.
So if you are bullish about this commodity which we use on a daily basis, then please drop a like
on the video to spread its reach and if you are new to the channel please subscribe and hit the
bell so you never miss out on any of these gems and also check us out in Twitter for
live market updates. On the back of the market uncertainty, we are beginning to see investors
flocking to US options trading. And so if you need a decent platform which enables you to trade
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That said let’s get on with it with our first stop, which is Alcoa Corp, Inc. (NYSE: AA)
which is punching hard an now sitting at $70 per share with a market cap of $13.2bn.
We first called it on the channel here in September at $48 per share and it is squeezing
up strongly and soon to give us 100% gains in 6months. We call these gems early on the discord
so if you’re not on it yet you should consider joining to learn from a vibrant community,
live trading and training sessions and lots more …. And since calling it, its momentum
has been building very strongly punching over 70% and keeping the stock fundamentals aside
the macro economic environment bodes very well for this stock
and I don’t think looking at those macro factors, this would be cooling down anything soon
and is the reason why analysts are suddenly getting exciting about this play.
Alcoa reported their fourth quarter and full year 2021 results
that included the Company’s highest annual net income and earnings per share, driven by
continued strength in alumina and aluminum pricing and solid operational performance.
Fourth Quarter Highlights included the following;
Increased revenue to $3.3 billion, a 7 percent sequential increase
and highest quarterly result since 4Q18 Generated $565 million in cash from operations;
finished the quarter with a cash balance of $1.9 billion, including restricted cash of $110 million
For the Full Year Highlights
Posted highest annual net income of $429 million and earnings per share of $2.26
Generated revenue of $12.2 billion, an increase of 31 percent from 2020 and the highest since 2018
Realized a 140 percent annual increase in Adjusted EBITDA excluding special items to $2.8 billion
Their CEO Roy Harvey commented that they had a transformative year in 2021;
where they posted their highest ever annual net income, returned cash to their stockholders
and significantly reduced their debt and pension obligations,”.
“Their performance demonstrates that their long-term strategies are delivering value
and strengthening Alcoa, so they can be successful through all phases of the commodity cycle. “They
have a talented workforce, a portfolio of strategically located assets, a suite of
low-carbon products, and innovative technologies with the potential to transform their industry.”
They said Higher aluminum and alumina prices, and higher premiums for value add products,
drove a 31 percent increase in revenue in 2021 to $12.2 billion. Annually,
the average realized third-party price of primary aluminum increased 50 percent and
the average realized third-party price of alumina increased 19 percent.
In 2022, the Company projects total bauxite shipments to range between 48.0 and 49.0
million dry metric tons, consistent with 2021. Total alumina shipments are expected to be
between 14.2 and 14.4 million metric tons, an increase from 2021 with the resolution
of the San Ciprián strike and recovery from the outage of a bauxite unloader at Alumar.
Alcoa expects that current metal index price benefits will roughly offset the
raw materials and energy challenges, and that improvements from portfolio actions
and sales contract pricing will mitigate other seasonal changes and headwinds.
And if you feel the price of Alcoa is bit punchy for you, then you want to check out our number 2
stock here which is Century Aluminum Co (CENX) which is currently sitting at $18.46 per share
with a market cap of $1.6bn. Similar to Alcoa Century has been responding very well to the
macro economic environment being up 62.9% in the last 6m and given the outlook of
these commodities stocks, this bull run doesn’t seem like it will be cooling down anytime soon.
Century Aluminum Company is a global producer of primary aluminum and operates
aluminum reduction facilities in the United States and Iceland.
They operate three U.S. aluminum smelters, in Hawesville, Kentucky,
Robards, Kentucky and Mt. Holly, South Carolina, and one smelter in Grundartangi, Iceland.
Their primary aluminum facilities produce standard grade and value-added primary aluminum products.
In their 3rd quarter results, they reported, shipments of primary aluminum for the quarter
ended September 30, 2021 increased 3 percent sequentially, driven by the restart project at Mt.
Holly and ongoing project activity at Hawesville. Their net sales for the third quarter of 2021
increased by 10 percent sequentially due to higher aluminum prices and increased regional premiums.
Century reported an adjusted net loss of $(5.7) million for the third quarter of 2021,
a $22.1 million improvement sequentially.
Their CEO Roy Harvey commented that “Industry conditions remained robust in the third quarter,
with continued strong demand expansion in their markets in Europe and the United States,
“At the same time, production cuts in China and Europe,
driven by global energy shortages and Chinese decarbonization policies, have moved the global
aluminum market into deficit, resulting in aluminum inventories falling to multi-year lows.
“And in their own operations, their expansion projects at Hawesville and Mt. Holly progressed
on schedule and they continue to expect that both of these projects will be substantially complete
by year end. Like other market participants, they have begun to see inflationary pressure in many of
their key raw materials, most significantly in energy and alumina, but their operations
remain well positioned to continue to deliver strong results in the fourth quarter and beyond.
Century will report fourth quarter 2021 earnings on Thursday, February 24, 2022,
so we can expect some more positive news then.
So what are analysts saying here?
The energy crisis in Europe and power rationing in China, combined with strong demand
underpinned by rising sales of EVs, has put the 66m tonne a year aluminium market
on a path to “inventory depletion” by 2023
according to Goldman Sachs, which has set a 12-month target price of $4,000 for the metal.
They say in the context of already "critically low" inventories of aluminum globally,
bleak scenarios such as this one have Goldman Sachs thinking that "aluminum markets are facing
a melt-up in prices this year."That would obviously be bad news for the industrial
manufacturing companies that will have to buy aluminum, whatever the price. On the other hand,
for investors in metals producers outside of Russia and China, the prospect of higher prices
is just one more good reason to buy shares of companies like Alcoa and Century Aluminum.
So some very very interesting and mindblowing prospects ahead for these penny stocks
but only consider getting in if the price is right for you and if you fully understand the risks.
This video is not financial advice, a buy or a sell recommendation, but is meant to bring some
new and exciting penny stocks to your attention for you to do your own research.. As always I
would love to hear from you, so please let me know your thoughts on these top penny stocks
in the comments section below and what other penny stocks are catching your eyes lately.
And If you are new to my channel, please ensure to subscribe and hit the bell so you are notified
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Thank you so much for being here and I look forward to have you in my next video. Thank you