International Business Machines Corp. (IBM), Caterpillar Inc. (CAT), Alcoa Inc (AA): Three Dow Laggards of 2013

Alcoa Inc (NYSE:AA) — YTD return: -6.57%
Alcoa, the global leader in aluminum production, has been by far the worst-performing stock in the Dow year to date. Falling commodities prices are a big threat to the company: Aluminum spot prices are down more than 15% since January, creating serious concerns about Alcoa’s ability to grow its revenue. Alcoa’s credit was also downgraded by Moody’s to junk status back in May. Moody’s cited pressures from within the aluminum industry and from falling prices.

To counter the issues facing its bottom line, Alcoa Inc (NYSE:AA) has initiated a serious cost-control effort with a goal of cutting $750 million by the end of 2013. It is this move that seems to be keeping Alcoa from ending up like its competitors Rio Tinto plc (ADR) (NYSE:RIO) and Aluminum Corp. of China Limited (ADR) (NYSE:ACH), which are down 29% and 34%, respectively, year to date.

The outlook for aluminum is bleak, with little indication of when global demand for the metal will turn around. Alcoa Inc (NYSE:AA) faces a large degree of uncertainty and unfavorable conditions through the rest of 2013. These ongoing concerns have manifested themselves in Alcoa’s poor performance as of late.

The market has not been kind to these three companies so far in 2013, and their poor performances have held the Dow back. Moving forward, keep an eye out for economic indicators like commodity prices, housing starts, and exchange rates on the yen to give you an idea of when these companies may start turning things around.

The article 3 Dow Laggards of 2013 originally appeared on Fool.com and is written by Raymond Boisvert.

Raymond Boisvert has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines (NYSE:IBM).

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