5 Stocks To Watch On The Back Of Alcoa's Strong Report (AA)

Sure shares of Alcoa AA are down around 2% today on the back of earnings, but the earnings report and the commentary is much more important the 2% move that stock is making today. Alcoa beat Wall Street estimates yesterday after the bell, as the unofficial start to earnings season got underway. Alcoa reported 21 cents on revenues of $5.7 billion, which was 3 cents better than Wall Street expectations. Revenue came in line with estimates. More importantly, it looks like Klaus and crew have turned the ship around, as the company continues to surprise with its EPS. It's even more noteworthy, as aluminum is the most energy intensive metal to make. With rising energy costs, one could assume that Alcoa might have problems beating estimates. Not the case apparently. Pricing for alumina and aluminum continued to show strength in the quarter, as evidenced by strong demand from abroad. If you are looking to trade off the back of the strong report from Alcoa, Rio Tinto RIO, Chinalco ACH, are two aluminum plays, with Rio Tinto owning Alcan. Alcoa said it potentially weak results in automobile sales in China, on the back of higher taxes on cars. Sales are expected to rise 10-15% this year, as opposed to last year's 32%. I expect auto sales in the U.S., which is the second largest car market after China will continue to improve, as the economic conditions here improve. Steel companies like U.S. Steel X, AK Steel AKS and Nucor NUE should benefit from improved U.S. auto sales. Alcoa didn't have a homerun quarter, but this was certainly worth at least a double, and maybe an RBI. Alcoa, led by Klaus Kleinfeld, looks like it's turning the corner, and I have to say well done. Disclosure: no position in names mentioned