In this piece, we will take a look at the 11 best aluminum and aluminum mining stocks to buy. If you want to skip our introduction of the aluminum market and the coverage of some recent developments, then you can take a look at the 5 Best Aluminum and Aluminum Mining Stocks To Buy.
Aluminum is one of the most important raw materials on Earth. The modern day transportation industry is built on the back of the shiny metal as its light weight and high strength make it suitable for applications that require cost efficiency such as aircraft. Making a steel aircraft is likely to scare engineers when they look at engine fuel consumption and other constraints such as take off weight.
Since its demand depends on industrial output, aluminum market prices depend on investor perceptions of global economic activity. If they believe that conditions are ripe for growth, then prices will appreciate as aluminum firms scurry to add capacity. On the supply side, the aluminum industry depends on a handful of countries to continue stable production. If for any reason production is halted, then prices jump as well.
As part of our coverage of 15 Largest Aluminum Producing Countries In The World, Insider Monkey discovered that as of December 2022, the People's Republic of China was the world's largest aluminum producer. China produced 40 million tons of aluminum in 2022, and the second biggest aluminum producer was the Republic of India whose four million tons placed it at a distant second.
Looking at global aluminum demand, our look at the top fifteen largest consumers of aluminum shows that while China was the largest producer, it was South Korea that led the pack as it consumed nearly 43 kilograms of aluminum per person in 2022. Interestingly though, if you check out Aluminum Consumption By Country: Top 15 then you'll find that while China produced the most aluminum, it was Canada that was the world's largest aluminum supplier as Canadian aluminum exports touched $8.31 billion in 2021.
Shifting gears, the aluminum industry is made of large and small companies that have to invest substantial capital in mining facilities. Some of the biggest aluminum companies in the world are spread all over China, Japan, and Australia. These include Rio Tinto Group (NYSE:RIO), the Saudi Arabian Mining Company, and Vedanta Aluminum. This shows that despite the fact that Canada was the world's largest aluminum exporter in 2021, the aluminum companies themselves are not limited to one continent.
In terms of dollar value, the global aluminum industry was worth $255 billion as 2022 ended. Analysts believe that from there onward until 2029, the sector will grow at a compounded annual growth rate (CAGR) of 6.1% until 2029 for an estimated worth of $255 billion.
Additionally, since it's literally the building block of modern day construction and transportation, aluminum is also one of the oldest post industrial revolution industries. One of the oldest companies in the world is Alcoa Corporation (NYSE:AA) which was set up in 1886. Alcoa sells bauxite and aluminum, and January 2024 has seen the firm post its fourth quarter of 2023 earnings results. The results saw Alcoa meet analyst revenue estimates and beat them for earnings per share by posting $2.6 billion and -$0.56 (analyst estimates had penciled in an 84 cent loss). Consequently, the shares proceeded to appreciate by double digit percentages in the stock market in the days following the earnings release. Alcoa's earnings saw the firm's management share that raw material costs were favorable during the fourth quarter but higher energy costs continued to be a headwind.
According to Alcoa's chief financial officer Molly Beerman:
Fourth quarter 2023 adjusted EBITDA increased as improved raw material costs and shipment volumes offset energy and price-mix challenges. In addition, favorable production costs, including recognition of the full-year benefit for Section 45X of the Inflation Reduction Act at Warrick and Massena more than offset higher other expenses. Alumina segment EBITDA increased $31 million sequentially, primarily on lower raw material costs and lower production costs in Brazil and Australia. We also saw a substantial benefit from lower raw material costs in the Aluminum segment, which combined with favorable production costs, primarily 45X, to offset the impact of higher energy costs and lower value-add product premiums.
The higher enerminugy costs included a second year of unfavorable legislative changes in Norway’s CO2 compensation arrangement. Outside the segments, transformation demolition costs were lower, but inter-segment eliminations and other corporate costs were unfavorable. Let’s look at cash movements within the fourth quarter on the next slide. The cash balance increased $18 million in the quarter to $944 million. The largest source of cash was working capital reduction of $222 million, which more than offset the largest use of cash, capital expenditures at $188 million, higher EBITDA of $89 million, various other items totaling $97 million and net non-controlling interest contributions of $18 million, mostly offset all other uses of cash. Moving on to other key financial metrics.
With these details in mind, let's take a look at the best aluminum and aluminum mining stocks to buy. Some top picks are Constellium SE (NYSE:CSTM), Alcoa Corporation (NYSE:AA), and Crown Holdings, Inc. (NYSE:CCK).
11 Best Aluminum and Aluminum Mining Stocks To Buy
An airplane hangar filled with components, showing the enormous scale of the company's maintenance & overhaul services.
Our Methodology
To make our list of the best aluminum and aluminum mining stocks, we ranked companies that mine the material or produce end products such as ingots by the number of hedge funds that had bought their shares during Q3 2023. The top stocks were selected as the best aluminum stocks.
For these best aluminum and aluminum mining stocks, we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11 Best Aluminum and Aluminum Mining Stocks To Buy11. Glencore plc (OTC:GLNCY)
Number of Hedge Fund Investors In Q3 2023: N/A
Glencore plc (OTC:GLNCY) is one of the biggest metal companies in the world that also produces and sells aluminum. It scored a big alumina related win in December 2023 by buying $1.1 billion in ownership interests for a Brazilian alumina refinery. The firm joins Constellium SE (NYSE:CSTM), Alcoa Corporation (NYSE:AA), and Crown Holdings, Inc. (NYSE:CCK) in our list of the best aluminum stocks to buy.
10. Kaiser Aluminum Corporation (NASDAQ:KALU)
Number of Hedge Fund Investors In Q3 2023: 10
Kaiser Aluminum Corporation (NASDAQ:KALU) is an aluminum end product company that sells coils, rods, bars, and other associated products. The firm announced a 77 cent dividend in January 2024, but the stock has struggled this year and is down by more than 7% year to date.
By the end of last year's third quarter, ten out of the 910 hedge funds covered by Insider Monkey's research had held a stake in Kaiser Aluminum Corporation (NASDAQ:KALU). Ken Fisher's Fisher Asset Management was the firm's biggest hedge fund shareholder courtesy of its $12.3 million stake.
9. Tredegar Corporation (NYSE:TG)
Number of Hedge Fund Investors In Q3 2023: 11
Tredegar Corporation (NYSE:TG) is another aluminum end product company that sells products for construction, transportation, energy transmission, and other use cases. 2023 ended on a positive note for the firm as the International Trade Commission (ITC) announced that it is opening an investigation into illicit aluminum importation imports.
During 2023's September quarter, 11 out of the 910 hedge funds profiled by Insider Monkey had bought the firm's shares. Tredegar Corporation (NYSE:TG)'s largest stakeholder among these is Mario Gabelli's GAMCO Investors as it owns 4.2 million shares that are worth $23.1 million.
8. Luxfer Holdings PLC (NYSE:LXFR)
Number of Hedge Fund Investors In Q3 2023: 13
Luxfer Holdings PLC (NYSE:LXFR) manufactures industrial grade cylinders with aluminum alloys. Its shares are down by 7% year to date and the firm has not beaten analyst EPS in any of its four latest quarters.
Insider Monkey took a look at 910 hedge fund holdings for their third quarter of 2023 investments and found that 19 had invested in the firm. Luxfer Holdings PLC (NYSE:LXFR)'s biggest investor in our database is Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management through its $27.6 million investment.
7. Century Aluminum Company (NASDAQ:CENX)
Number of Hedge Fund Investors In Q3 2023: 19
Century Aluminum Company (NASDAQ:CENX) is an American aluminum products company headquartered in Chicago, Illinois. Its shares soared by 14% in January 2024 after B. Riley upgraded the shares to Buy from Hold and increased the share price target to $14 from an earlier $10.
19 out of the 910 hedge funds surveyed by Insider Monkey were Century Aluminum Company (NASDAQ:CENX)'s shareholders during Q3 2023. Ken Fisher's Fisher Asset Management was the largest shareholder as it owned $16.8 million worth of shares.
6. Reliance Steel & Aluminum Co. (NYSE:RS)
Number of Hedge Fund Investors In Q3 2023: 25
Reliance Steel & Aluminum Co. (NYSE:RS) is headquartered in Arizona, and it makes and sells thousands of metal based products for industrial use cases. The stock is rated Buy on average and analysts have set an average share price target of $297.
For their September quarter of 2023 shareholdings, 23 out of the 910 hedge funds part of Insider Monkey's database were Reliance Steel & Aluminum Co. (NYSE:RS)'s shareholders. Daniel Yacktman's Yacktman Asset Management was the largest shareholder since it held $322 million worth of shares.
Alcoa Corporation (NYSE:AA), Reliance Steel & Aluminum Co. (NYSE:RS), Constellium SE (NYSE:CSTM), and Crown Holdings, Inc. (NYSE:CCK) are some top hedge fund aluminum stock picks.
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Disclosure: None. 10 Best Aluminum and Aluminum Mining Stocks To Buy is originally published on Insider Monkey.
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