We recently compiled a list of the Jim Cramer’s Lightning Round: 7 Stocks to Watch. In this article, we are going to take a look at where Alcoa Corporation (NYSE:AA) stands against the other stocks to watch.
Jim Cramer, host of Mad Money, recently shared his thoughts following his interview with President-elect Donald Trump on the floor of the New York Stock Exchange. One of the key takeaways for Cramer was Trump’s comments about China. During the conversation, Trump emphasized his positive relationship with President Xi, which in itself was noteworthy.
However, Trump also remarked that China has not always been a responsible global actor and that this dynamic must change. Cramer highlighted that this is crucial for a number of reasons, particularly the need to protect Taiwan, which he sees as vital to safeguarding Taiwan Semiconductor, a company that plays a critical role in U.S. national security. Cramer also noted that the challenge lies in shifting China’s role from a long-standing adversary to a more balanced trading partner, a task he feels could be difficult given the longstanding trade issues between the two countries.
Cramer further pointed out the complexities of dealing with a country that has exploited U.S. trade policies for years. He said:
“But let me tell you what I think can happen, I believe President Xi needs the U.S. much more than people realize. The Chinese economy is more deeply indebted.”
READ ALSO Jim Cramer’s Game Plan for This Week: 8 Stocks in Focus and Jim Cramer Talked About These 6 Airline Stocks
When it comes to the stock market, Cramer found Trump’s approach to be refreshingly straightforward, without any unnecessary bravado. He also observed that Trump’s openness toward cryptocurrency could have significant implications for the future of the U.S. dollar.
“I also thought the President-Elect had no bluster when it came to the stock market, that was a very good thing… The president-elect’s affinity for crypto will ultimately give the dollar a strange bedfellow. I want our country to be the capital of finance and that means being the capital of crypto too.”
He added that for this relationship to develop positively, Washington would need to address the growing national deficit, which he believes could diminish some of the speculative appeal of cryptocurrency.
“I want to believe that the White House’s attitude toward business is important to the direction of stocks. The current president is often going way out of his way to show his disdain for any business people. But what’s more important is profits so it certainly doesn’t hurt that Trump talked about wanting to cut corporate taxes once again to let more money fall to you, the shareholder. Love him or hate him, you gotta admit that’s good for your portfolio, which by the way, is still the true north of Mad Money.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 13. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Industrial workers carrying out the complex production process of alloy ingot at a factory.
Alcoa Corporation (NYSE:AA)
Number of Hedge Fund Holders: 42
When asked about Alcoa Corporation (NYSE:AA), Cramer expressed worries about China with regard to material stocks.
“Now here’s the problem with Alcoa, in the end, it’s a material stock. The material stocks are linked with China and therefore nobody wants them, even though Alcoa had a great quarter. So I have to go with the crowd and say, not now.”
Alcoa (NYSE:AA) produces and sells bauxite, alumina, and aluminum products, while also operating hydropower plants that generate and sell electricity to various industrial and wholesale markets. Appearing on the Bloomberg: The China Show in November, Bill Oplinger, President and CEO discussed various aspects of the aluminum industry, including the current commodity market.
He explained that global aluminum demand remains strong, with tight supply across the system, particularly in bauxite and alumina. Oplinger noted that supply constraints from China, including a cap on aluminum production, contribute to the market’s tightness, with high prices for bauxite and alumina. He emphasized that the company’s global presence, with operations in nine countries, allows it to manage within existing tariff structures, particularly those related to U.S. steel and aluminum tariffs from the Trump administration.
On inorganic growth, Oplinger highlighted the recent acquisition of Alumina Limited and a transaction in Saudi Arabia as part of the company’s growth strategy, which remains focused on the aluminum supply chain from mining to smelting. He said that Alcoa (NYSE:AA) is not looking to diversify into other metals but continues to focus on improving operations and reducing costs within the aluminum market. Finally, Oplinger stressed that the company’s geographic diversification, with assets spread across Australia, Africa, and Brazil, provides a competitive advantage in the face of geopolitical risks and supply chain challenges.
Overall AA ranks 3rd on our list of the stocks to watch according to Jim Cramer. While we acknowledge the potential of AA as an investment, our conviction lies in the belief that 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.