Riskier Alcan ready to cash in

Article Excerpt

In the 1980s and 1990s, Alcan qualified as what you might call a cyclical growth stock. It was cyclical because demand for and prices of aluminum and aluminum parts generally rise and fall with the economy. But it had a growth element because aluminum’s strength and light weight make it ideal for use in car parts, to cut fuel consumption. In the first half of this decade, however, Alcan and aluminum went through a slump. Alcan faced regulatory hurdles and the need to integrate major acquisitions. Aluminum demand and prices suffered due to weak car sales, and weak oil prices (which relieved some of the pressure to improve fuel economy). Aluminum prices shot up by more than a third since last summer, thanks partly to rising oil prices, which spurred interest in improving gas mileage. Alcan is beginning to benefit. It is sure to remain volatile, but it is a highly attractive choice for the Resource & Commodities sector of your portfolio. ALCAN…

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