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Two Ways: The Bull's Eye on Alcoa's Back


Strengthen your portfolio in good times and bad.


Alcoa (AA) stock jumped in today's session, recovering much of yesterday's 14% loss. The reason for the change in sentiment? According to Reuters, the stock was upgraded by analysts at Deutsche Bank and there's speculation the company is ripe for a takeover.

In a research note this morning, Deutsche Bank analysts said Alcoa was able to raise about $2 billion through asset sales and equity placements for the month of March. The firm upgraded the rating from "sell" to "hold."

Separately, Charles Aitken, director of Southern Cross Equities, said Alcoa could be a good takeover target by global mining giant BHP Billiton (BHP). Aitken suggested Alcoa's assets were cheap: "I find it highly interesting that there has been a huge volume spike in Alcoa shares and BHP has raised fresh debt capital that is almost identical in scale to Alcoa's debt position."

Alcoa shares finished the session up 9% to $7.34. The company kicks off earnings season next week when it reports fiscal fourth-quarter results on April 7.

From the Bull Pen: Alcoa stock is below $10, which makes it an inherently risky play. Nonetheless, the upside potential is there. Bulls playing this can set a sell stop below $7.

From the Bear Cave: Bears can look to Burlington Northern Santa Fe (BNI). Did it have a false breakout above its 50-day moving average? Those testing the downside can set a buy stop above recent highs, near $63.

Another Turnaround Tuesday in the books. Tomorrow's Hump Day. Then it's off to New Orleans for this Minyan. Have a great night!

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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No positions in stocks mentioned.

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