Aluminum stocks are in focus this morning after US President Donald Trump announced plans to raise tariffs on imported aluminum by as much as 25%.
The new government has yet to disclose the timeline for implementing the new tariffs.
Investors should note that aluminum is a key metal used in several industries, including construction, transportation, and packaging.
While the tariffs news is positive for the US aluminum stocks across the board – the following two stand to benefit the most as raised tariffs on imported aluminum take effect.
Alcoa Corp (NYSE: AA)
Alcoa could benefit significantly once new tariffs on imported aluminum go into effect as it’s one of the largest producers of aluminum in the United States.
The tariffs will likely increase the cost of foreign aluminum, giving Alcoa a competitive advantage in the US market.
Higher tariffs could add to the financial strength of Alcoa Corp that topped handily topped Street estimates in its fiscal fourth quarter.
At the time, the firm’s chief executive William F. Oplinger touted the company’s strategic actions and operational improvements in 2024, adding “Looking ahead, we’ll continue to drive operational excellence and improve our overall competitiveness.”
Note that the optimism surrounding Alcoa stock is not entirely dependent on the tariffs news.
Even before President Trump’s announcement, Wall Street had a consensus “overweight” rating on Alcoa shares.
Analysts see an upside in AA to $49 which indicates potential for about a 35% gain from current levels.
Investors should also know that Alcoa shares currently pay a dividend yield of 1.11% which makes them even more attractive for income investors.
Century Aluminum Co (NASDAQ: CENX)
Century Aluminum could benefit from higher tariffs on foreign aluminum imports under the Trump administration as it’s also a major US-based aluminum producer.
As imported aluminum becomes more expensive, domestic producers like CENX could see a significant increase in demand for its products.
Note that the development of the tariff has unraveled only days before Century Aluminum is scheduled to report its financial results for the fourth quarter.
The consensus is for it to earn 30 cents a share in its Q4 – the same as it earned in the same quarter last year.
President Trump’s tariffs announcement reinforces the bullish view on Century Aluminum stock that Wolfe Research shared with clients in December.
At the time, the firm’s analysts said CENX shares could climb to $27 by the end of 2025, which indicates potential for a whopping 45% gain from their previous close. Century stock is up more than 10% already following the tariffs new over the weekend.
Unlike AA shares, however, Century Aluminum is not a suitable pick for income investors as it does not pay a dividend at writing.
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