Alcan Inc. $53 – Toronto symbol AL

Article Excerpt

ALCAN INC. $53 (Toronto symbol AL; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is the world’s second-largest producer of aluminum, after U.S.-based Alcoa Inc. High oil prices will put more pressure on automobile manufacturers to offer more fuel-efficient vehicles. One of the easiest ways for carmakers to cut fuel consumption is to replace more steel parts with aluminum products. Aerospace companies are also using more aluminum to cut the weight of new planes. Alcan needs vast amounts of electricity to process raw aluminum, so it is vulnerable to rising electricity prices. However, it cuts this risk by operating its own power plants next to its smelters. In fact, company-owned power plants account for half of the power its smelters use. It also enhances profits by selling excess power to local utilities. Alcan now trades at just 9.6 times its likely 2006 profits of $4.95 U.S. a share. The $0.60 U.S. dividend yields 1.3%. Alcan is a buy. buy…

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