ALL EYES ON ALCOA
Getty Images ( 2009-07-08 22:01:48 )
ALL EYES ON ALCOA
Alcoa, the first company in the Dow Jones industrial average to report profits, kicks off earnings season on July 7. The results of the aluminum maker, typically a bellwether for the economy, may offer hints about whether the recession is easing or not.
But the bottom line isn't the best indicator, since Alcoa's earnings are closely tethered to the price of the metal. Instead, investors should pay attention to what management says about customer orders. The company provides aluminum for cars, aerospace manufacturing, residential construction, and other areas. If orders are picking up, it could be a sign that an economic rebound may be around the corner. "They seed multiple components of the economy," says Citigroup stock analyst Brian Yu. "If there's more demand than supply, that's a positive.
Yu figures investors have overly punished Alcoa. At 10.44, the stock is trading 71% off its 52-week high. He rates the stock a buy.
Copyright 2009  BusinessWeek
