Category Archives: $AA

AA Fair Vale update

August 3rd, posted the AA idea, but advised to wait for the stock to go back up above 225 – which it has failed to do – dropping to as low as 155 post results.

Consensus target price now 270, but clearly the market disagrees with stock so much lower.

If they sell their Insurance business which generates around 17% of earnings, they could get around 50p a share (assumes a 10x multiple), which leaves the Road Side assistance business which is the bulk of trading on a EPS of around 7x.

This seems cheap but the debt load is fairly high – they need to start paying down debt and the business could attract a higher multiple.

Fair Value now 200. The stock seems to have found a base around 160.

Trade: Buy at 160, take profit target 195, stop 145.

Trade Idea: the AA – CEO Gets fired may be an opportunity to…

AA stock has underperformed the market over the past 12 months or so, and the recent firing of the CEO could be an opportunity to buy.

Fair Value = 310 Yield 4.6%

The AA underwrite insurance as well as breakdown cover – both could sources of recurring recurring revenue….
Stock looks cheap here at 210 but may be under continued selling pressure in the short term.

Trade Idea:
Wait for Stock to settle and buy if it goes up above 225 – there is still 75p of upside at this price. Take profit target 300, Stop loss 180.
Pays a dividend of 4.6% while you wait!
Consensus target price also 300.

$GNW(Genworth) – recovery story turns sour….$Z and $FIT both down 10% post results

Genworth stock crashing after results – after good Q1 where the recovery seemed on track, it has never recovered following a Morgan Stanley downgrade.

Zillow and Fitbit both getting crushed even after good quarters.

Market is tough at the moment, stick to stops and stay on the sidelines, long CASH!
China story may not be over.

Commodities getting crushed.

2CentView – stopped out of $GNW and $AA. Still in $Z and $FIT (FitBit).

$AA (Alcoa) traded close to the $10.40 stop but managed to stay above it post results…

Alcoa posted results last night with EPS Missing estimates by 3cents but revenues coming in higher.Klaus Kleinfeld was bullish as ever on his business, but the outlook for Commodity stocks is tough, given the pressure on commodity prices. Listen to the conference call if you own the stock.

2CentView is to stick the trade recommended on 13June – Aluminum is the right metal to have exposure to in a growing US Economy – the consensus Analyst estimates have been revised down from around $17 to $15. Stick to the $10.40 stop.

Stock pays a 1.25% vs $10.80 (price at the time of writing).

The Current market is tough – volatility is high – stick to your stops and build up cash reserves to look for quality companies which cheapen up to attractive levels.
Long term they will make you a lot of money.

$AA (Alcoa) FV=$15 vs 12.1 , Yield =1%. Stock looks attractive after 30% Sell off since Early feb

Alcoa has dropped a whopping $5 from it’s $17 high set in Early Feb.

Aluminum is preferred to steel now in Cars and of course used by the AirCraft manufacturers who have a full order book for the next 10 years.
Klaus Kleinfield is a TOP CEO, ex Siemens , the german has turned round the company since taking over the helm in 2008.

As the US Economy expands, it will spend on upgrading infra-structure – and Aluminum will be a key metal.

Alcoa, has always been the first company to report, so earnings will be announced early July. If you want to trade into Earnings, suggest the following trade:

Buy here at $12, Target $15 , Stop $10.40 YIeld = 1%, so you are paid more than the yield on a 10Y German Bund to wait!