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Rethinking Alcoa as a Bellwether
CNBC.com | July 12, 2011 | 02:20 AM EDT

Aluminum giant Alcoa has long been regarded as a bellwether for the U.S. economy and a key gauge of the health of the commodities sector. But one strategist is challenging the notion.

"I don't understand how we keep talking about Alcoa as a global barometer for commodities and yet 50 percent of its revenues come from the United States,” said John Licata, Chief Commodity Strategist at research consultancy Blue Phoenix told CNBC on Tuesday. “How is it indicative of a true market place? To me that is flawed."

Alcoa has also consistently lagged the market in financial performance, Licata noted, despite the sector’s booming track record in recent years.

“How can a perennial disappointer in terms of earnings fit the bill as the leader, as the benchmark, if it's constantly underperforming the commodity space despite the rally that we've been seeing in commodities across the past couple of years?" he questioned.

Alcoa kicked off the second quarter earnings season on Monday with profit that matched expectations, and topped forecasts on the revenue front. Chief executive Klaus Kleinfeld was upbeat about the outlook, citing growing demand for aluminum in the aerospace sector.

However, Licata is concerned that the optimism is exaggerated, and that investors may be missing an important development in the past week – the planned implementation of Australia's carbon tax.

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