Four Aluminum Companies Worth Investigating for 2024's Market
Four Aluminum Companies Worth Investigating for 2024's Market
Aluminum is a multifaceted metal with numerous applications. It's used for storing drinks, constructing buildings, flying planes, and driving cars. As a result, experts predict a 5% annual compound growth rate for aluminum demand until 2026. Key factors contributing to this projection include increased infrastructure investment and energy conservation efforts.
This forecast points towards a promising future for aluminum stocks. Let's delve deeper into how investors can capitalize on the growth in the aluminum industry.
Top Aluminum Stocks
Top Aluminum Stocks in 2024
Various companies specialize in producing aluminum or manufacturing high-value goods using it. The leading players in this sector include:
| Top Aluminum Stocks | Symbol | Market Cap | Company Description || --- | --- | --- | --- || Alcoa | NYSE:AA | $9.4 billion | A large-scale aluminum producer. || Kaiser Aluminum | NASDAQ:KALU | $1.1 billion | A prominent producer of semi-processed aluminum products. || Century Aluminum | NASDAQ:CENX | $1.3 billion | A global aluminum producer. || Rio Tinto | NYSE:RIO | $101.8 billion | A diverse mining conglomerate. |
Let's explore these prominent aluminum companies in detail.
1. Alcoa
1. Alcoa
Alcoa is a significant aluminum producer and one of the world's top bauxite miners, the primary raw material used to create aluminum. The company owns stakes in seven high-quality, low-cost bauxite mines in Australia, Brazil, Guinea, and Saudi Arabia.
Bauxite is converted into alumina at Alcoa refineries. The company operates one of the world's largest alumina trading businesses, with six low-cost refineries in Australia, Brazil, and Spain.
Alcoa manufactures a variety of aluminum products using its smelting and casting processes. The company also manages numerous energy resources to minimize aluminum production costs and carbon emissions. Over three-quarters of Alcoa's smelting operations run on renewable energy.
Alcoa is focusing on research and development to reduce its carbon footprint and improve overall operation sustainability. Key projects include ELYSIS, a joint venture with Rio Tinto to develop an innovative, low-emission aluminum smelting technology, and ASTRAEA, which aims to transform post-consumer aluminum scrap into pure aluminum. Alcoa anticipates rising capital expenditure on sustainability and return-seeking projects, with potential for even higher investment in new initiatives.
(NYSE:AA)
In 2024, Alcoa made its first significant acquisition by purchasing Australia's Alumina Limited, which further strengthened its position as a pure-play, upstream aluminum company.
Alcoa also plans to return more money to shareholders in the near future. It reinstated its quarterly dividend in late 2021. Additionally, it boasts a substantial share buyback program, positioning the company for value-creating growth as it expands and implements its potentially groundbreaking technology initiatives.
$9.4 billion
2. Kaiser Aluminum
2. Kaiser Aluminum
A large-scale, integrated aluminum producer.
Kaiser Aluminum is a leading producer of semi-processed aluminum products. It manufactures a range of sheet, coil, extrusions, rod, bar, tube, and wire products. Its customers include those within aerospace, packaging, general engineering, custom automotive, and other industrial sectors.
Kaiser Aluminum benefits from various growth drivers, such as the packaging industry's shift towards aluminum cans for environmental reasons, the aerospace industry's rising passenger air travel, and increasing demand for automotive components due to advancements in fuel efficiency and electric vehicles.
Kaiser Aluminum's profitable aluminum business enables it to return cash to investors through dividends. As of mid-2024, it offers a 4% dividend yield, surpassing the average (S&P 500's was less than 1.5%).
3. Century Aluminum
(NASDAQ:KALU)
3. Century Aluminum
Century Aluminum is a global aluminum producer, operating three smelters in the U.S. and one in Iceland. It also has reduction facilities in both countries. Its facilities produce both standard and value-added primary aluminum products.
$1.1 billion
Century Aluminum is investing to reduce its carbon emissions. In 2024, the U.S. Department of Energy granted the company a $500 million investment to build a new low-emission smelter. This funding will enable the company to build the first new U.S. smelter in 45 years and contribute to industrial decarbonization.
The company is expanding its Iceland facility to produce more low-carbon products. It anticipates completing the project, which involves a $120 million investment, in 2024. Additionally, it has recently finished expansions at its American smelters to meet the increasing global demand for aluminum.
A leading producer of semi-fabricated aluminum products.
4. Rio Tinto
4. Rio Tinto
Rio Tinto is a diverse mining conglomerate, with significant aluminum production and a wide range of mining operations. It operates several aluminum smelters and refineries worldwide.
Rio Tinto is investing to improve its carbon emissions profile. Its innovative "Aluminium Dynamics" initiative aims to make its aluminum smelters more energy-efficient and reduce carbon emissions. The company is also collaborating with other industry leaders to develop new technologies to create a more sustainable aluminum industry.
(NASDAQ:CENX)
In addition to aluminum production, Rio Tinto's diversified business portfolio includes diamonds, copper, nickel, iron ore, titanium dioxide, uranium, and lithium. This broad range of operations and investments positions the company as a valuable player in the global mining industry.
Rio Tinto is a multifaceted mining corporation headquartered in London. It specializes in the production of assorted minerals, such as ferrous metals including iron ore, aluminum, and copper. Furthermore, it produces an array of non-ferrous elements, including borates, lithium, diamonds, salt, and titanium dioxide.
$1.3 billion
Rio Tinto functions as a comprehensive aluminum manufacturer. It operates four bauxite mines, four aluminum processing facilities, and 14 aluminum smelters. It also maintains seven hydroelectric power plants to minimize energy expenses and lower carbon emissions.
One of its significant long-term initiatives involves its ELYSIS joint venture with Alcoa. This project, backed by Apple (AAPL 0.07%), the Canadian and Quebec governments, aims to replace the greenhouse gas emissions generated during the aluminum smelting process with pure, unadulterated oxygen. If this technology succeeds, it could potentially eliminate 6.5 million metric tons of greenhouse emissions in Canada alone when implemented in all domestic smelters. This would be analogous to removing approximately 1.8 million automobiles from the roads. The firms are targeting their initial production by 2027.
A global aluminum producer.
Although Rio Tinto boasts a robust aluminum business, it is not a pure aluminum play like its peer companies. The majority of its earnings (approximately 70% during the first half of 2024) stem from iron ore production. Aluminum contributed just 12%, with copper accounting for 14%, and minerals accounting for 5%. Consequently, this may not be the most suitable investment option for an investor solely interested in the aluminum market.
However, diversity has its perks, including exposure to varied markets (copper and iron ore) experiencing increased demand due to their significant contributions to reducing carbon emissions.
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Plentiful avenues for investing in the expanding aluminum industry
Aluminum showcases remarkable versatility and significant importance. We can expect demand to surge in the upcoming years as the global economy expands, which will likely benefit companies engaged in aluminum production and aluminum products, in addition to rendering aluminum stocks an engaging prospect for investors.
Matt DiLallo holds positions in Apple and has the following options: short November 2024 $250 calls on Apple. Our Website has positions in and recommends Apple. Our Website has a disclosure policy.
Given the text about the aluminum industry, its growth, and top aluminum stocks, here are two sentences that contain the words 'money', 'finance', and 'investing'.
- Investors looking to capitalize on the predicted growth in the aluminum industry can consider investing in major aluminum producers such as Alcoa, Kaiser Aluminum, Century Aluminum, and Rio Tinto to potentially generate money through dividends and capital appreciation.
- As experts forecast a 5% annual compound growth rate for aluminum demand until 2026 due to increased infrastructure investment and energy conservation efforts, financing opportunities for aluminum-focused companies could also increase, possibly leading to attractive investment prospects for financiers.