Metlife Inc (MET), Annaly Capital Management, Inc. (NLY), Alcoa Inc (AA): Preparing for Economic Growth and Rising Interest Rates

If the global economy really does improve, I would like to think that Alcoa Inc (NYSE:AA) has the chance to see higher share prices again. If aluminum prices rise, I would not be surprised to see a relief rally in the stock. You cannot take a position in the stock until the picture becomes clearer, however. The company’s recent conference call showed that it is doing well managing expenses and generating as much income as possible, but there is no growth to be had. I would buy it under $5 on speculation, though nothing suggests that it will go that low yet.

On the first sign that aluminum prices are recovering, I would take a real position in Alcoa Inc (NYSE:AA). The company has managed to keep its head above water, and despite the increasingly bleak metal environment it is not overly saddled with debt. It also has enough cash on the balance sheet to keep moving forward.

I want to see Alcoa Inc (NYSE:AA) use this time effectively, and it has been cutting costs where possible. I still maintain that when things do get better it will be great news for Alcoa. I would wait on the company, but it is worth grabbing if it gets really cheap.

Conclusion

Things are getting better, which is always hard to see when things have been so bad for so long. The calamity that was the financial crisis left many shaken. Interest rates will eventually rise and a new boom cycle will begin, leading the Fed to shift to preventing the economy from overheating.

In that environment, a company like Metlife Inc (NYSE:MET) can boost its returns since its fundamentals tell an interesting long-term story. On the other hand, interest rates are a double-edged sword for a company like Annaly Capital Management, Inc. (NYSE:NLY). Since it is a dividend investment, Annaly Capital Management, Inc. (NYSE:NLY) is worth getting as long as you can get it cheap.

Alcoa Inc (NYSE:AA) is an avoid unless you want to speculate when it is far cheaper. The earnings conference call should give you some idea into what the company’s expectation is.

The article Preparing for Economic Growth and Rising Interest Rates originally appeared on Fool.com and is written by Nihar Patel.

Nihar Patel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Nihar 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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