We recently published a list of 7 Best Metal Stocks to Buy According to Analysts. In this article, we are going to take a look at where Alcoa Corporation (NYSE:AA) stands against other best metal stocks to buy according to analysts.
The metals industry, which supplies vital materials for manufacturing, renewable energy, and construction, is a major contributor to the expansion of the world economy. This market has grown remarkably in the last several years. The Business Research Company projects that the worldwide metals market will increase by 5.9%, from $4,392.33 billion in 2024 to $4,651.03 billion in 2025. Growing demand for industrial and precious metals, particularly in the construction, automotive, and renewable energy industries, is driving this growth.
Since copper is still one of the most sought-after metals, the growing demand for the metal is a major factor in this development. The copper market is projected to increase by 7.8% during the period 2024-2025, reaching $190.72 billion, according to The Business Research Company. This increase is mostly attributable to the growth of infrastructure worldwide and the extensive use of copper in electrification projects.
At the same time, there is a high demand for metals like copper, aluminum, and steel, especially from the expanding construction sector. According to the U.S. Census Bureau, the value of monthly construction activities in the United States increased by 4.3% on a YoY basis in December 2024. Thus, the global acceleration of infrastructure projects is anticipated to support the metals market for the foreseeable future due to this increasing demand.
Along with industrial metals, precious metals have done noticeably better than the overall market, driven by investor demand for safe-haven assets and inflationary fears. For example, gold ETFs had their greatest gain since 2010 in 2024, rising a whopping 26%. It is anticipated that this trend will continue into 2025 if inflationary pressures continue to drive demand for gold as a protective investment. Similarly, as of February 26, 2025, silver futures experienced a 40.34% year-over-year rise while gold futures produced an impressive 43.64% return, as reported by S&P Global. These figures highlight the rising demand for gold and silver as investments against an unstable economic landscape.
Simultaneously, the metals sector is undergoing a surge in sustainability efforts and technological breakthroughs. Metal production is being revolutionized by innovations such as generative AI in additive manufacturing, which is making it more sustainable and efficient. On the other hand, the global market for recycled scrap metal is expected to rise at a robust 6.4% annual growth rate from $70.5 billion in 2024 to $75.5 billion in 2025. By 2035, the recycling industry is predicted to account for 72.5% of the market value as environmental restrictions and sustainability drive companies to use recycled metals, especially ferrous metals.
Beyond technological innovations, metals like lithium, copper, and zinc are at the center of industry transformation as a result of the move toward cleaner energy and electrification. Lithium is becoming more affordable and widely available because of new extraction techniques, which are enhancing its use in energy storage applications. For instance, the lithium market is expected to expand by 16.3%, from $7.75 billion in 2024 to $9.01 billion in 2025. Meanwhile, as reported by Zinc.org, the demand for zinc in solar power is predicted to reach 568,000 tons by 2030, demonstrating the rising significance of zinc in renewable energy.
Therefore, the overall metal market is experiencing strong demand, technological breakthroughs, and increased focus on sustainability and clean energy initiatives. Therefore, experts are enticed to pick the best metal stocks with the potential for rapid growth to capitalize on bright future prospects of the market.
Our Methodology:
To curate our list of the 7 Best Metal Stocks to Buy According to Analysts, we picked the top companies having a substantial exposure to extraction, processing, and manufacturing of metals. Furthermore, we made sure that we pick companies with strong market capitalization. Finally, we ranked the stocks based on the upside potential predicted by a healthy number of analysts, as of writing this article.
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).
Industrial workers carrying out the complex production process of alloy ingot at a factory.
Alcoa Corporation (NYSE:AA)
Average Upside Potential: 37.19%
Number of Hedge Fund Holders: 47
Alcoa Corporation (NYSE:AA) is a prominent global manufacturer of aluminum, bauxite, and alumina. It is a vertically integrated business with properties in Australia, Europe, South America, and North America.
Alcoa Corporation (NYSE:AA) saw remarkable financial growth for Q4 ended December 31, 2024. Increased pricing for aluminum and alumina were the main drivers of its 20% sequential revenue increase. Net income more than doubled to $202 million from $90 million in Q3 2024, which is attributable to increased alumina exports and improved pricing that bolstered profitability. As a result, adjusted EBITDA also increased dramatically, rising 49% to $677 million.
Alcoa Corporation (NYSE:AA)’s strong manufacturing capabilities were demonstrated by record yearly production at five of its smelters. Furthermore, the company completed the acquisition of Alumina Limited in January 2024 and made significant progress in increasing its refining capabilities. As part of a larger strategic restructuring, Alcoa also reduced the size of its portfolio by selling its 25.1% stake in Ma’aden joint ventures and finally closing its Kwinana refinery in Australia. In addition, by renewing its alumina supply contract with Aluminium Bahrain (Alba) for an additional 10 years, the company ensured long-term stability and a consistent market for its goods.
Due to the issuance of $737 million in green bonds, Alcoa Corporation (NYSE:AA) concluded 2024 with $1.1 billion in cash. Having integrated with Alumina Limited, the company is still committed to increasing cost-effectiveness and growing its capacity for smelting aluminum. Thus, Alcoa is in a good position to maintain its rising trajectory, while continuing to optimize its cost and production by capitalizing on substantial cash reserves. Alcoa is among the best metal stocks to buy according to analysts.
Overall, AA ranks 1st on our list of best metal stocks to buy according to analysts. While we acknowledge the potential of AA as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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.