It has begun. As I have said in the past Alcoa (NYSE:AA) unofficially kicks off earnings each reporting season. I recommended it was time to buy last summer as I thought shares were undervalued. Simple as that. And I discussed why. Well, the commodities market weakness as well as general stock market malaise has led to my call being about flat-to-down in that time frame. That is disappointing. Ouch. The fact is that this long-standing bellwether company has been operating under some tough conditions. First, an economy that limps along. Despite the markets being at all-time highs, the economy is not strong. It is mildly positive, at best. Since the Great Recession, have we come back? Yes, but not nearly as strongly as we would have expected say 5 years ago. In short, we have simply just meandered forward.
Of course, with this meandering economy the company and the stock is struggling because it relies heavily on metal prices in conjunction with a robust construction economy. Of course the company produces and manages primary aluminum, fabricated aluminum and alumina, which has been a tough sector to operate in for some time. One reason I like the name overall is that it has little competition, which is a big plus but at the same time, it can be tough to be competing with the global economy. I called for a buy at $10.50. The stock is at $10.14, so what do we do?
