Alcoa Inc (AA) Could Be a Buy

Analysts remain fairly optimistic on Ford. With analysts on a consensus basis projecting the company will grow earnings by 11.9% per-year over the next five years. Investors are also compensated with a 2.4% dividend yield. The stock trades at an 11.4 price-to-earnings multiple, which is reasonable when considering the projected growth and dividend yield.

Get on board with Boeing

The Boeing Company (NYSE:BA) has a diversified set of businesses, but primarily the growth catalyst in the company is the rising demand for Boeing passenger aircraft. The backlog for airplane deliveries grew to a record $392 billion, which includes $20 billion of net orders during the quarter.

The company reported flat revenues in its most recent quarter because of its recent hiccup with the Boeing 787 Dreamliner. However, Boeing provided guidance that indicates that the company is still on track to grow earnings. The company estimates that it can grow earnings to $6.10 for fiscal year 2013 from the year-ago $5.11.

Over the next five years, analysts are optimistic, projecting that the company should be able to grow earnings by 13.92% per-year over the next five years. The company also compensates investors with a 1.86% dividend yield. The stock trades at a 19.6 earnings multiple, which is reasonable when considering the mid-double-digit growth rate, paired with the dividend yield.

Conclusion

Investing into Alcoa Inc (NYSE:AA) has been difficult over the past five years. Investing now, may mean considerable risk, due to the risk exposure to aluminum prices. The price of aluminum should go up in future years based on the supply/demand imbalance that Alcoa Inc (NYSE:AA) has projected. However, if things don’t go to plan, investors should consider diversifying into both Ford and The Boeing Company (NYSE:BA) in order to mitigate the risk of owning a commodity driven play like Alcoa.

The article Alcoa Could Be a Buy originally appeared on Fool.com and is written by Alexander Cho.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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