Century Aluminum Company (CENX)

Rising demand for aluminum from the U.S. automobile industry bodes well for Century Aluminum Company (CENX). Century Aluminum specializes in smelting and owns six facilities in the U.S. and Iceland. Between late 2003 and mid-2008, China’s insatiable demand for the metal fueled an extended rally in aluminum prices. However, aluminum prices...

Rising demand for aluminum from the U.S. automobile industry bodes well for Century Aluminum Company (CENX). Century Aluminum specializes in smelting and owns six facilities in the U.S. and Iceland.

Between late 2003 and mid-2008, China’s insatiable demand for the metal fueled an extended rally in aluminum prices. However, aluminum prices have weakened significantly since this inflection point, hitting their lowest level since the 2008-09 financial crises in January 2014.

Century Aluminum’s management makes a compelling case that, outside of China, the world faces a deficit of aluminum production.

Rising aluminum prices and premiums, as well as a much-improved cost structure, could boost Century Aluminum’s earnings to about $0.50 per share in 2014—a far cry from the $0.82 per share loss that the firm posted in 2013. By 2015, the company’s earnings could exceed $1.00 per share.

At the height of the last bull market for aluminum, shares of Century Aluminum fetched between 1 and 1.2 times the firm’s annual revenue, compared to about 0.75 times revenue today. A return to this multiple implies upside of 40% to 60% from the stock’s current quote of less than $12.50 per share. Buy up to $13.50 per share for investors who can stomach the volatility.

Elliott Gue & Roger Conrad, Capitalist Times,

www.capitalisttimes.com, 888-960-2759, March 18, 2014

Roger S. Conrad

Roger S. Conrad needs no introduction to individual and professional investors, many of whom have profited from his decades of experience uncovering the best dividend-paying stocks for accumulating sustainable wealth. Roger built his reputation with Utility Forecaster, a publication he founded more than 20 years ago that The Hulbert Financial Digest routinely ranked as one of the best investment newsletters. He’s also a sought-after expert on master limited partnerships (MLP) and former Canadian royalty trusts. In April 2013, Roger reunited with his long-time friend and colleague, Elliott Gue, becoming co-editor of Capitalist Times. Although the masthead may have changed, readers can count on Roger to deliver unbiased, high-quality research and in-depth analysis of profitable investment opportunities.