No. 5: Alcoa
Return as of 3/30: +15.8%
Investor: Jeff Reeves
InvestorPlace Editor Jeff Reeves’ pick for the Best Stocks for 2012 contest is Alcoa (NYSE:AA), and it hasn’t disappointed during the first quarter, outpacing the S&P 500 with 18% returns year-to-date.
His original argument for Alcoa was a good valuation — the company already had flopped dramatically from pre-recession levels and streamlined its way back to profitability — and that because aluminum has a certain baseline demand built in, there was no room to go but up.
And up it went. Alcoa’s quarterly earnings report was a bit of a mixed bag, but revenues of $5.99 billion were up from the year-ago period and beat analyst expectations. However, since its breakneck gains in January, Alcoa stock has mostly listed while the markets continued climbing higher.
Fears of a Chinese economic slowdown have at least had some investors slow to fully embrace an Alcoa comeback. Still, Alcoa projects 7% growth in aluminum demand, thanks to cutbacks in production, which should help prices — and ultimately, AA stock.
Disclosure: Jeff Reeves owns a personal position in Alcoa stock.