Structural Supply Tightening Drives Multi-Year Bull Case for Alcoa Corp. (AA)

Alcoa Corporation (NYSE:AA), a global producer of aluminum and alumina, has caught the attention of Eagle Capital Management, which discussed the metal producer in its second quarter 2026 investor letter. The company believes Alcoa is a beneficiary of a favorable multiyear supply and demand outlook for the energy and metals sector, as well as a well-positioned asset base on the global cost curve. Alcoa's leadership team is described as good at capital allocation, which contributes to the company's strong position.

The metal producer is currently trading at a 20% discount to its replacement cost, providing a significant opportunity for growth. Eagle Capital Management expects earnings per share (EPS) growth in the mid-teens over the next several years, driven by the upward shift in aluminum and alumina prices. The company is not among the 40 most popular stocks among hedge funds, indicating that it may be an undervalued investment opportunity.

While Eagle Capital Management acknowledges the potential of Alcoa Corporation as an investment, they prefer constructing a portfolio that can perform across multiple outcomes rather than relying on one forecast. They believe that certain AI stocks offer greater upside potential and carry less downside risk. The company's shares have gained 74.65% over the past 52 weeks and are currently trading at $51.54 per share, with a 52-week trading range between $28.92 and $84.38.