Shares of the Pittsburgh company on Tuesday closed 0.75% higher at $47.08.
Alcoa is a relative winner, analyst Christopher LaFemina said in a research note. That's because the outlook for aluminum has become more positive as the global push for decarbonization is intensifying.
"While the near-term outlook for aluminum is risky as China's economy slows, the longer-term story has become more positive on structural factors," he said.
"Aluminum is an important metal for decarbonization and will likely continue to take share from steel given its lightness (about one-third the weight of steel) and the fact that it is easily recyclable."
Electric vehicles contain about 30% more aluminum than internal combustion engine vehicles, LaFemina said. Aluminum is also used in wind and solar power infrastructure, in some cases as a substitute for copper.
"China has accounted for more than 80% of global aluminum supply growth in the past 20 years," he added, "but China's recent shift to being a net importer of aluminum as its production growth slows is a critically important structural change to the aluminum markets."
LaFemina said China's recent power crisis gives him more confidence that it is no longer "a serious supply threat in aluminum."
"Alcoa is well-positioned to benefit from the improving supply/demand outlook for this metal," he said.
Earlier this month, Alcoa posted record third-quarter profit, unveiled a new buyback program and declared its first-ever dividend.
Earnings came to $1.76 a share, swinging from a loss of 26 cents a year earlier. The latest figure was a penny ahead of Wall Street's consensus forecast. Revenue rose 31.5% to $3.1 billion, topping analysts' estimates of $2.9 billion.