In this article, we will take a look at the 5 best aluminum stocks to buy. To see more such companies, go directly to 11 Best Aluminum Stocks To Buy.
5. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 26
Ranking 5th on the list of the best aluminum stocks to buy now is Rio Tinto Group (NYSE:RIO). Rio Tinto Group (NYSE:RIO) is a mining giant which has a dedicated segment for aluminum called Rio Tinto Alcan, which is based on Canada. Rio Tinto Alcan was established in 2007 as a Rio Tinto Group (NYSE:RIO) subsidiary after the merger of Rio Tinto Group (NYSE:RIO)’s Canadian subsidiary and Canadian company Alcan.
Rio Tinto Alcan is a major miner of aluminum. Rio Tinto Group (NYSE:RIO) on its website says that the company produces some of the highest quality, lowest-carbon footprint aluminum in the world.
Rio Tinto Group (NYSE:RIO) is in the spotlight these days after China’s announcement to lift COVID restrictions. About 70% of Rio’s iron ore production goes to China. China’s reopening is expected to bode well for the company in the coming months.
A total of 26 hedge funds tracked by Insider Monkey reported having stakes in Rio Tinto Group (NYSE:RIO) as of the end of the third quarter. The total value of these stakes was $1.72 billion.
4. Arconic Corporation (NYSE:ARNC)
Number of Hedge Fund Holders: 26
Pennsylvania-based Arconic Corporation (NYSE:ARNC) produces aluminum sheets and related materials that are used in lucrative markets like automotive, aerospace, commercial transportation, industrial, packaging and building and construction markets. In 2020, the company became one of the leaders in the aluminum sheets market.
In November 2022, Arconic Corporation (NYSE:ARNC) said its board approved a two-year share buyback program of up to $200 million. Analysts believe Arconic Corporation (NYSE:ARNC) could benefit in the future from the auto sector since car companies are striving to use aluminum in their production to produce lightweight products. Arconic Corporation (NYSE:ARNC)’s rolled and extruded products have a bright future, according to market analysts.
Hedge funds upped theirs stakes in Arconic during the third quarter. A total of 26 funds in our database had stakes in Arconic Corporation (NYSE:ARNC), compared to 19 funds in the previous quarter.
3. Reliance Steel & Aluminum Co. (NYSE:RS)
Number of Hedge Fund Holders: 28
Reliance Steel & Aluminum Co. (NYSE:RS) is one of the best aluminum stocks to buy. The Arizona-based Reliance Steel & Aluminum Co. (NYSE:RS) is North America’s biggest metals services company, with services related to hundreds of metals including aluminum, brass, alloy, copper, carbon steel, stainless steel and titanium
Reliance Steel & Aluminum Co. (NYSE:RS) looks undervalued since it’s trading at about 7x 2023 earnings. As a major chunk of the company’s revenue comes from steel, it’s poised to grow as steel demand and consumption is expected to thrive in the future.
A total of 28 hedge funds tracked by Insider Monkey reported having stakes in Reliance Steel & Aluminum Co. (NYSE:RS) as of the end of the third quarter.
2. Constellium SE (NYSE:CSTM)
Number of Hedge Fund Holders: 29
Constellium SE (NYSE:CSTM) is a French company whose stock is trading on the NYSE. The Paris-based company develops and recycles aluminum products and solutions. Constellium SE (NYSE:CSTM) makes advanced alloys and engineered solutions for a range of applications, such as beverage cans, cars, airplanes, and more. It is one of the biggest aluminum companies in Europe.
In October 2022, the company posted strong third-quarter results. GAAP EPS in the period came in at €0.88, beating estimates by €0.46. Revenue in the quarter jumped 27% to reach €2.02 billion, beating analyst estimates by €50 million. Cash from operations in the quarter came in at €154 million while free cash flow totaled €74 million.
Constellium SE (NYSE:CSTM) is set to thrive because of its dominant position in the packaging market. Packing accounts for about 40% of the company’s sales, as of the first nine months of last year. As the world moves towards recyclable, environment-friendly packaging solutions, companies like Constellium will benefit.
As of the end of the third quarter, 29 hedge funds tracked by Insider Monkey reported having stakes in Constellium SE (NYSE:CSTM), compared to 27 funds in the previous quarter. The total value of the stakes held by these funds was $245 million.
Here is what ClearBridge Investments has to say about Constellium SE (NYSE:CSTM) in its Q2 2021 investor letter:
“We continue to find companies we believe fit this description at reasonable prices, such as Constellium, a new position in the second quarter. Constellium is an aluminum processor with a history of excess returns on capital above cost that has lagged during a major capacity increase to serve the auto industry, which should see strong demand given aluminum’s favorable environmental characteristics relative to steel.”
1. Alcoa Corporation (NYSE:AA)
Number of Hedge Fund Holders: 44
Pennsylvania-based Alcoa Corporation (NYSE:AA) is the world’s eighth biggest producer of aluminum. Over the past six months, the stock has gained about 17% in value despite the challenging macroeconomic environment and uncertainty in the commodities market. Analysts believe the company has secular growth catalysts in the automotive, packaging and aerospace markets. As auto companies strive to increase the fuel efficiency of ICE vehicles and the range of BEV vehicles, Alcoa is set to enjoy increasing demand. Alcoa Corporation (NYSE:AA) produces aluminum and fabricated aluminum and plays a key role in all aspects of the industry, including mining, refining, smelting, fabricating, and recycling.
As of the end of the third quarter of 2022, 44 hedge funds tracked by Insider Monkey reported having stakes in Alcoa Corporation (NYSE:AA), compared to 39 funds in the previous quarter. The total value of these stakes was $580 million.
ClearBridge Investments made the following comment about Alcoa Corporation (NYSE:AA) in its Q3 2022 investor letter:
“We bought Alcoa Corporation (NYSE:AA), a leading aluminum producer, after the stock sold off over lower commodity prices. The current price of aluminum is unsustainably low, below its cost of production, despite inventories being at historic lows. We believe these depressed prices are due to the evaporation of Chinese demand resulting from its zero COVID-19 policy, but that it will likely recover over the next few quarters.
Additionally, Alcoa is leading the industry in reducing carbon emissions from its smelting process which is helping to improve its cost position relative to global competitors. Given its compelling valuation and strong free cash flow yield, we are confident in the company as it is increasingly relied upon to meet the growing structural demand from electrification and the global energy transition.”
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