ALL-CAN

ALL-CAN

Could Alcan becomes ALL-CAN? Add some AL@50.60, in front of Alcoa’s earnings. AL was the lager of material stocks. It was actually down slightly in 2004, compared to triple-digits advance for most of base metal stocks. Aluminum price is actually quite strong and demand remains far exceeding supply capacity. AL had a very strong Q3/04 (positive surprise) and I believe the Q4/04 results should be strong as well (Alcoa’s earning announcement shall provide further confirmation). Moreover, expectation for AL is fairly low compared to other material stocks and its valuation remains reasonable. High-flying material stocks have not trended well recently, and base metal prices have shown signs of peaking. If this is the case, high-flyers with great expectations might be vulnerable to profit taking while lagers may benefit from potential rotation. AL also has a few near term catalysts in its favor . On the negative side, input costs remain high and foreign exchange exposure unfavorable. The bigger picture question is, like all other material stocks, CHINA. Looking for at least 10% return for 2005.