This aluminum producer beat estimates by a nickel last quarter, posting EPS of $0.14 per share, and company insiders have been loading up on shares.
Noranda Aluminum Holding Corporation (NOR)
from the Cheap Investor
Noranda Aluminum Holding Corporation (NOR) produces primary aluminum and rolled aluminum coils.
The company’s Bauxite segment mines, produces, and sells bauxite used for alumina production. Its Alumina segment refines and converts bauxite into alumina, which is used in the production of primary aluminum; and sells smelter grade alumina and alumina hydrate, or chemical-grade alumina. Its Primary Aluminum segment produces and sells aluminum products in various forms, such as billets, rods, sow and foundry, and commodity grade sow. Its Flat-Rolled Products segment primarily produces rolled aluminum products, including finstock for use in commercial, residential, and automotive applications; semi-rigid containers for pre-packaged foods; flexible packaging products for food, drink, agricultural, and industrial products; and transformer windings for use on power grids.
Noranda Aluminum sells its products to original equipment manufacturers of air conditioners, transformers, semi-rigid containers, and foil packaging; and other metals end-users.
Noranda has a fair balance sheet with $21 million ($0.30 per share) in cash, a book value of $0.96 per share and total debt of $668 million. Insiders own 13% of the 69 million shares outstanding, and 122 institution own 90% of the float (shares in public hands). For the quarter ended December 31, 2014, institutions purchased 200,000 more shares than they sold. The negative factor is that the stock price has been in a downward trend, falling from its 52-week high of $5.64 on September 12.
On February 18, Noranda Aluminum announced that it will complete a third redraw rod mill at its New Madrid, Missouri facility by the end of 2015, which will increase Noranda’s redraw rod capacity to 220 million pounds annually, up more than 40% from its current capacity of 155 million pounds.
We like Noranda Aluminum because the Company is profitable, and it is increasing capacity by building a third redraw rod mill. If it continues to grow its revenues and earnings, the stock has the potential to move 50 to 100% over the next couple of years. Noranda also pays a small (1.3%) dividend. We think the stock could be an acquisition candidate.
Bill Mathews, The Cheap Investor, www.thecheapinvestor.com, 847-697-5666, April 2015