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TheStreet Open House

Alcoa Is Shining Brighter

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.

Bottom Line

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.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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