Shares of Alcoa (AA) took a breather today, March 22, from their torrid run. At the close Alcoa was down 0.89%
But I think the stock will go higher from here.
On Sunday Australia banned alumina shipments to Russia in response to the Russian invasion of Ukraine. The country is the source of 20% of the alumina used by Russia’s aluminum industry.
Aluminum rose as much as 4.8% on the London Metal Exchange on Monday.The metal is now up 25% for 2021.
Shares of Alcoa, which have been on a tear first on news of supply deficits and then on sanctions against Russian aluminum producers, gained 10.01% on Monday, March 21.
Alcoa is now up 52.38% for 2021 to date as of the close on March 21 and up 23.39% in the last week.
The stock is up 15.97% since I added it to my Jubak Picks Portfolio on February 18.
On the fundamentals the stock is now slightly over-valued with Morningstar calculating fair value at $83.87 and the shares closing Monday at $90.69.
In the current commodity rally, carried higher by sanctions against Russia after that country invaded Ukraine, I don’t think fundamentals are the key determinant of stock price. But I would be watching here for a time to take profits.
Not yet. But even this commodity rally won’t go on forever. Today, however, I’m raising my target price for Alcoa to $97 from the previous $93 a share.
