Analytical Review of the Stocks of Alcoa Inc.
Alcoa Inc., #AA [NYSE]
Industrial goods, Aluminum, USA
Financial performance of the company:
Index – S&P 500; Beta – 1.14;
Capitalization – 10.35 В; Return on asset: -0.50%;
Income: -322.00 М; Average volume – 34.20 М;
P/E: - ; ATR – 0.50.
Analytical review:
- The company ranks the first on capitalization in the sector of “Aluminum” among the issuers traded in the American stock market;
- On Monday, on March 11, the company reported for the Q1 of the fiscal year 2016. According to the press-release in the reporting period company’s net profit fell from 195 million USD to 16 million USD. However, EPS amounted to 0.07 USD, which was above analysts expectation of 0.02 USD;
- At the press-conference, company’s executives stated that in the reporting period company’s revenue fell by 15% from 5.82 billion USD to 4.95 billion USD due to closure of some plants, strong USD and decline in the commodity prices;
- This year the company expects the increase in demand for aluminum, which will boost sales;
- The rise in the price of aluminum in the world has a positive impact of the company’s activity. Since the end of March the price of aluminum rose by 5% at LME exchange;
- The company signed a contract with Airbus to supply parts for building aircrafts. Alcoa production will be manufactured on 3D-printers based on new technologies.
Summary:
- Despite significant reduction of the company’s revenue and net profit, company’s performance was better than expected in the market. Alcoa has strong growth potential. The increase in demand and positive dynamics in the price of aluminum will increase investors’ trust to the company.
- It is likely that in the near future company’s quotes will go up.
Trading tips for CFD of Alcoa Inc.
Medium-term trading: the moment the issuer is traded in the range of 9.20-10.00 USD. After breaking out and testing of the upper limit (10.00 USD) of the range and in case of the respective confirmation (such as pattern Price Action), we will recommend to open long positions. Risk per trade is not more than 2% of the capital. Stop order can be placed slightly below the signal line. Take profit can be placed in parts at the levels of 11.50 USD, 13.00 USD and 14.00 USD with the use of trailing stop.
Short-term trading: after the release of the company’s report for Q1 of the fiscal year 2016 the market experienced a gap down. At the moment, on the chart with the timeframe 15M the issuer is traded near the local resistance of 9.50 USD. After breakdown and testing of this level we recommend to open long positions. Risk per trade is not more than 3% of the capital. Stop order can be placed slightly below the signal line. Take profit can be placed in parts of 9.60 USD, 9.70 USD and 9.80 USD with the use of trailing stop.
The material has been provided by LiteForex - Finance Services Company - www.liteforex.com
