Why Alcoa is transforming from a pure-play aluminum company



Alcoa’s transformation

Alcoa (AA) is the largest aluminum company in the US. It’s among the top three aluminum producers globally. The company was founded in 1888. Last year, the company had been in business for 125 years. It’s one of the oldest aluminum companies. It pioneered the electrolytic process. The electrolytic process is used for aluminum extraction.

Aluminum production has been Alcoa’s main business for years. Under its current strategy, Alcoa is now transforming into a diversified metal company. Alcoa isn’t just a primary aluminum producer. It’s spread across the aluminum value chain. Along with primary aluminum, it also manufactures several alloy products. Alcoa transformed itself to serve its customers.

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What do we cover in this series?

In this series, we ‘ll analyze Alcoa’s transformation. We’ll highlight the key points from Alcoa’s investor’s conference. The conference was held earlier this month. More importantly, we’ll also learn what this transformation means for investors. We’ll discuss Alcoa’s key drivers.

Aluminum plays’ performance on Wall Street 

Alcoa stock performed well on Wall Street this year. It delivered ~60% returns. Century Aluminum (CENX) has been the star when it comes to Wall Street performance. Recently, its share price touched a new 52-week high after the release of the third quarter results. Share prices for other aluminum plays—like Constellium N.V. (CSTM) and Kaiser Aluminum (KALU)—lagged in terms of share market returns. This can be seen in the previous chart.

Please be aware that you can get diversified assess to the metals and mining sector through the SPDR S&P Metals and Mining ETF (XME). Currently, Alcoa and Century Aluminum are among XME’s top ten holdings.

In the next part of this series, we’ll look at Alcoa’s business model. We’ll analyze how Alcoa is transforming itself.


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