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Alcoa: A Sharp Play on Rising Metal Prices

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The stock market version of an NFL opening kickoff, Alcoa (NYSE: AA) often gets the party started when it comes to quarterly earnings season.

Lately, the global leader in aluminum products has kicked earnings seasons off with a bang thanks to a surge in metal prices. In fact, Alcoa has topped earnings expectations in each of the last six quarters—and in many instances by a wide margin.

So, in a few weeks when third-quarter earnings reports start pouring in, Alcoa’s may not be only one of the first but one of the strongest considering aluminum futures have trended higher since July 1st. This makes Alcoa’s stock not only good earnings play but a sturdy long-term bet on the growing global appetite for aluminum.

Like many commodities, the price of aluminum has risen sharply during the global economic recovery. Aluminum futures that had slipped below $1,500 per ton in April of last year are currently trading around $2,800. They are rapidly closing in on the record high of $3,070 set back in February 2008.

There are both demand and supply-related reasons behind the stunning rebound in aluminum. Global demand for the metal has been soaring........

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