The company also sees upwards of 10% growth in the aerospace industry and 4% and 7% growth in automotive and commercial transportation respectively. This supports previous statements made by management about companies including Ford Motor (F) and Boeing (BA) that have started to migrate towards using aluminum in their vehicles and jets. However, it doesn't end there.
Alcoa also projects a 3% improved performance in its packaging business, while building/construction and industrial gas turbine are both projected to grow at 5%. Likewise, there are also plenty of growth opportunities in areas such as appliances, where names including General Electric (GE) might become a significant consumer of aluminum.
Overall, it was an excellent quarter. Management deserves credit for continuing to figure out ways to develop productivity gains, which helped offset prolonged cost concerns. More importantly, management remains committed towards returning value to shareholders.
Based on its growth outlook, the stock looks incredibly cheap at $9 and remains undervalued by at least 40% -- $12 to $15 per share seems the more reasonable target based on the potential aggregate effect of these improvements.At the time of publication, the author held no position in any of the stocks mentioned. Follow @rsaintvilus This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV