The latest trade idea for Alcoa Stock ended today with a return of 104% for three days of risk. The original trade was outlined in this article on July 5 before markets opened on Monday. Thanks to all members who have emailed and thanked me for the trade. I appreciate the sentiments expressed.
Alcoa Earnings – After Hours
The jump today after hours in Alcoa Stock following their quarterly earnings release I do not think will last long. Revenue was up for the quarter and beat estimates by a small margin but earnings failed to meet estimates. Overall though I don’t see how these revenue or earnings numbers can excite investors. One large area of concern I think was heard in the comments from the CEO Klaus Kleinfeld who was speaking on CNBC. He gave the usual “song and dance” about the company, its growth prospects, search for new markets, etc., but then mentioned how China was moving from a fast growth to medium growth economy.
China and Brazil – Alcoa’s Achilles Heel
Alcoa’s revenue numbers depend heavily on China and Brazil and both countries are facing slowing economies. For Intel stock to recover its most recent highs, revenue and earnings have to keep growing. What Alcoa is showing us are numbers that are not truly growth but more of lackluster expansion. The company has had too many quarters where the rhetoric has been all about expansion, new markets, etc., but the revenue numbers just don’t show much to be excited about. For that reason I cannot see a recovery in the stock for months at the earliest.
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