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1 Aluminum Stock to Buy, 2 to Avoid By StockNews

by Mike Robinson

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© Reuters. 1 Aluminum Stock to Buy, 2 to Avoid

The demand for aluminum and its price are rising with the reopening of industrial activities and we think Constellium (NYSE:) is well-positioned to benefit from the industry tailwinds. However, with supply chain bottlenecks remaining a concern, we think fundamentally weak Alcoa (NYSE:) and Century Aluminum (NASDAQ:) are best avoided now. Let’s discuss.The lightweight and recyclable properties of aluminum make it a suitable alternative in a wide range of applications. The reopening industrial activity has led to an increase in aluminum demand, which has driven aluminum prices to new 10-year highs. Aluminum has seen a price increase of almost 80% since May 2020. Analysts expect that the global market for aluminum will grow at a rate of 5% CAGR between 2021 and 2026.

We believe that Constellium SE, an aluminum stock with fundamentally sound financials (CSTM), could see a significant increase in its price over the next few years.

Conversely, a military coup in Guinea, the location of the world’s largest bauxite reserves, is anticipated to precipitate a supply shortage and uncertainty in the market. Fundamentally weak aluminum stocks Alcoa Corporation AA (and Century Aluminum Company CENX (both) should be avoided.

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