Skip to main content

Market Overview

2 Aluminum Stocks To Buy, According To Jefferies

2 Aluminum Stocks To Buy, According To Jefferies

Despite potential risks from a trade war, Arconic Inc (NYSE: ARNC) and Constellium NV (NYSE: CSTM) boast favorable risk-reward profiles, according to Jefferies.

The Analyst

Jefferies' Martin Englert initiated coverage of Arconic with a Buy rating and $23 price target and Constellium with a Buy rating and $14 price target. On the other hand, the analyst initiated coverage of Kaiser Aluminum Corp. (NASDAQ: KALU)  with a Hold rating and $122 price target.

The Thesis

Companies like Arconic and Constellium are positioned to take advantage of the recovery in aerospace and increased utilization of aluminum in autos, Englert said a note.

In Arconic's case, the stock's "depressed" valuation gives the company a good opportunity to allocate its $500 million towards its stock buyback and recent interest from private equity firms adds to the stock's attractiveness. Looking forward to 2019, the company should see aluminum inflationary headwinds subside as costs are passed through and create an earnings tailwind.

Constellium's exposure to the auto sector makes the stock attractive, the analyst said. Specifically, management's positioned the company to grow its high-value auto body sheet capability. This should turn free cash flow positive and help deleverage the balance sheet.

Kaiser Aluminum boasts some of the best financial metrics in the space, including a net debt-to-capital of 13 percent and the highest EBITDA to FCF conversion. At the same time, the conservative capital structure and share repurchase program implies the stock is "most defensive" relative to peers.

Price Action

Shares of Arconic were trading higher by more than 10 percent while Constellium were higher by 2.7 percent. Shares of Kaiser Aluminum were trading lower by 1.2 percent.

Related Links:

Argus Turns Neutral On Arconic Amid 'Challenging Outlook'

Deutsche Bank Revisits Machinery Group After Tariffs, Macro Shifts

Latest Ratings for ARNC

Sep 2020Deutsche BankInitiates Coverage OnBuy
Sep 2020BenchmarkAssumesBuy
May 2020Credit SuisseInitiates Coverage OnOutperform

View More Analyst Ratings for ARNC
View the Latest Analyst Ratings


Related Articles (CSTM + ARNC)

View Comments and Join the Discussion!

Posted-In: Aluminum Jefferies Martin Englert Trade WarsAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

Latest Ratings

PBTruist SecuritiesMaintains88.0
CFRTruist SecuritiesMaintains111.0
FANGTruist SecuritiesMaintains105.0
SBNYCredit SuisseMaintains250.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at