We recently published a list of 10 Best Aluminum Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Alcoa Corporation (NYSE:AA) stands against other best aluminum stocks to buy according to billionaires.
Aluminum is one of the most essential and versatile materials required by modern industries. It is known due to its unique qualities including its lightweight nature, corrosion resistance, and efficient recyclability. As industries move toward sustainability and efficiency, aluminum is seeing an increase in its demand. In 2023, its global market was valued at $229.83 billion, which is forecasted to grow to $403.29 billion by 2032, a compound annual growth rate (CAGR) of 6.2%, according to Fortune Business Insights. As demand rises for electric vehicles (EVs), green energy, and lightweight manufacturing, aluminum is becoming an attractive investment.
One of the big reasons why aluminum is seeing a rise in demand is its usage in electric vehicles. Heavier metals are being replaced with aluminum to increase fuel efficiency and driving range by automakers like BMW and Mercedes. The U.S. aluminum market is expected to reach $43.05 billion by 2032 as EV manufacturers ramp up the use of aluminum in order to make vehicles lighter and more energy-efficient. Furthermore, the aerospace industry also plays a key role in its demand. As global air travel recovers, Boeing and Airbus are ramping up production, relying heavily on aluminum alloys for fuselages and wings.
Additionally, the packaging industry is booming as companies make use of aluminum’s 100% recyclability. Aluminum-made beverage cans contain 3x to 12x more recycled material compared to other materials, resulting in less wastage and energy consumption, as per The Aluminum Association. The circular economy is gaining momentum as manufacturers rely on recycled aluminum in order to cut costs and emissions. Moreover, recycling aluminum saves energy that goes toward producing new metal, making it a leap forward in sustainability efforts.
While demand for aluminum increases, the trade war over metals is gaining traction. According to The New York Times, U.S. President Trump recently reintroduced 25% tariffs on imported aluminum to protect U.S. manufacturers. While this move will raise costs for automakers, beverage companies, and construction companies relying on imported aluminum, the domestic producers may benefit. On the other hand, Canada and European countries are retaliating with reprisal tariffs, increasing global supply chain uncertainty. Producing 45 million metric tons of aluminum annually, China has capped its output. This implies that the increasing demand will be fulfilled through recycling and secondary sources. Thus, the global supply chain can face uncertainties and lead to price rises as U.S. tariffs escalate trade tensions.
Furthermore, an important stride in the aluminum space is the increase of aluminum-ion batteries. These are considered potential alternatives for lithium-ion batteries, as they offer faster charging, longer lifespan, and decreased costs. According to Future Market Insights, the market for aluminum-ion batteries is forecasted to grow to $9.5 billion by 2035 due to demand for renewable energy and electric vehicles. Considering that aluminum is cheaper and more abundant than lithium, this transition could transform energy storage and transportation.
On the other hand, billionaire investors are increasing their investments in the aluminum industry, reflecting strong confidence in its growth potential. Blackstone CEO, who is supporting U.S. aluminum tariffs, expects domestic manufacturing to propel, as reported by Reuters. Concurrently, AI Circle reports that Malaysian tycoon Koon Poh Keong and Song Zuowen, a Chinese billionaire, are increasing their investments in aluminum ventures through strategic stake swap. Furthermore, aluminum stocks are giving a return of 4.32%, year-to-date, surpassing the broader market’s -4.13% performance. Thus, these billionaire-backed entries reflect the industry’s strength and future potential.
Our Methodology
To come up with the Best Aluminum Stocks to Invest in According to Billionaires, we looked into Insider Monkey’s database for billionaire stock holdings as of Q4 2024. We placed the stocks on the basis of the number of billionaires that have invested in them, as it reflects strong institutional confidence.
In the case where stocks had the same number of holders, we used the total value of billionaire investments to break the tie. Furthermore, this list includes stocks backed by some of the most accomplished hedge fund managers and business leaders, offering perspective into where billionaire investors are allocating their capital.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Alcoa Corporation (NYSE:AA)
Number of Billionaires: 10
Number of Hedge Fund Holders: 47
Alcoa Corporation (NYSE:AA), an international leader in aluminum production, bauxite mining, and alumina refining, operates in Canada, Australia, Europe, and Brazil. The company sources primary aluminum and value-added products for various industries, including construction, transportation, and packaging.
Fueled by higher alumina and aluminum prices and increased shipments, Alcoa Corporation (NYSE:AA) reported a 20% sequential growth in revenue to $3.5 billion for Q4 ended December 31, 2024. Aluminum third-party revenue surged 5%, and the alumina segment saw a 45% increase in third-party revenue. Adjusted EBITDA increased to $677 million, while net income climbed to $202 million from $90 million in the prior quarter. Alcoa reported earnings per share of $0.76, with adjusted EPS at $1.04.
Operationally, Alcoa Corporation (NYSE:AA) made significant advancements, with nine of its 11 smelters growing annual production, five accomplishing record output, and key safety improvements across its facilities. Through cost reductions in raw materials, portfolio optimization, and improved productivity, the company has successfully surpassed its $645 million profitability improvement target ahead of schedule. It has also solidified its balance sheet by repaying $385 million in debt while maintaining its dividends.
Moreover, Alcoa leveraged strong demand in the packaging and electrical sectors within the aluminum segment, overcoming challenges in the construction and automotive markets. It’s positioned as a key supplier of sustainable aluminum solutions due to its low-carbon Equilum aluminum contributing to half of its European metal sales. Alcoa Corporation’s (NYSE:AA) market position benefits from the tight global aluminum market due to smelter curtailments in Russia and delays in Indonesia.
Looking ahead, strengthened by smelter restarts and strategic expansions, Alcoa Corporation (NYSE:AA) predicts aluminum production between 2.3 million and 2.5 million tons in 2025. The company continues to focus on acquiring mining approvals in Australia, advancing energy transition projects, and further deleveraging its balance sheet. To strengthen its commitment to shareholder returns, Alcoa’s Board of Directors declared a quarterly dividend of $0.10 per share. Thus, Alcoa positions itself as one of the best aluminum stocks to buy with its strategic initiatives and strong market positioning.
Overall, AA ranks 5th on our list of best aluminum stocks to buy according to billionaires. While we acknowledge the potential of AA, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
