Alcoa (NYSE:AA): What's not to Like? Short Term!

Alcoa (NYSE:AA) has been doing a lot of things right over the last several years, and no matter what they do it seems they aren't able to break through and return to the share price they've been accustomed to in the past.

That of course isn't something they have much control over for the most part, and the overall macroeconomic conditions have been prohibitive to them in the industries they serve. That isn't going to change any time soon, even with the attempt by CEO Klaus Kleinfeld's attempt to paint the near future as more rosy than it in reality will be.

Some of the good things Alcoa is doing which will ultimately pay off for them, is the $10.8 Saudi Maaden joint venture, which they've started construction on recently, the JSC Russing Shipbuilding partnership they just announced, and cutting back on can-sheet volumes, which weren't profitable for them.

In other words, they're expanding while cutting costs, and that will definitely pay dividends for them and their shareholders down the road, but there is little in the short term which is positive for the company. They are also increasing scale, which over the long haul should really position them strongly against their competitors.

Hopes of growing demand in China have been dampered some as the country attempts to control the property markets in its urban centers, which have been out of control in the inflationary sense.

That will result in lower aluminum demand, as other raw materials, which should fall below prior expectations. But even if that does materialize, and the demand for aluminum reaches the 10 percent Alcoa is looking for, that doesn't address the slowing U.S. and European markets, which will definitely cut into demand.

Another element that Alcoa has going for it over the long term is the emergence of aluminium ETFs, which will create an entirely new market for the lightweight metal.

While they are buying up aluminum now, their competitor Rusal is the major beneficiary at this time. Word is they are struggling to meet demand there, and that could help Alcoa going forward.

The only other short-term possibility of getting some traction for Alcoa is if the aluminum that is tied up by investors and contracts keeps the demand from being met, even though the supply is at a high level.

That seems unlikely to me, even though some think it's a real possibility.

Either way, Alcoa is doing a lot of good things to prepare for a rebound, and when that rebound comes, their share price should start to fly again.

Those with a long-term outlook could do very well with Alcoa, as it's not if they're going to surge in share price again, it's only a matter of when.

In the short term I think everyone needs to manage their expectations, and if they do fall even further in price, it should definitely be considered a buying opportunity for those looking to place some money in them.