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Alcoa: Breakout Time, Baby

Summary

Owning Alcoa has sucked over the past 18 months. There's no other way to put it.

But there have been a number of catalysts unfolding in recent months and quarters for bulls to be optimistic about.

Now, shares are breaking out and more upside seems likely.

Rarely ever do I double-down. I tend to focus on the long term, starting with a small position, then add to it over time as my conviction grows or cut it loose if the story isn't panning out.

With Alcoa (NYSE:AA), I made the fatal mistake of buying the stock at an average price around $14 near the end of 2014 and first half of 2015. The stock's slide from $14 in May to a low of $8 in August was almost a straight line. It was disheartening.

I liked Alcoa because of how CEO Klaus Kleinfeld told the story. He talked about all the innovative products, its airline business and its exposure to the now-booming Ford (NYSE:F) F-150.

I still loved the story, but by August I hated the stock. Obviously, the commodity business has been an enormous drag and some other things haven't gone Alcoa's way either. There were negatives that I wasn't blind to, I just misjudged their impact.

After the stock dropped to around $7 in January, I doubled my position. And to be clear, this is far from a gloat-piece. Trust me, picking a stock that lost 50% isn't exactly something to hang your hat on - especially in front of others.

The company's earnings results were so-so by...


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