Search

Earnings for the 1st qtr of 1995 were good for the aluminum industry, due to good fabricated product and primary metal prices. Aluminum stocks are timely for investors seeking dividends, but not price appreciation. Copper prices are expected to weaken in 1996 with added copper supplies, but increased demand will strengthen the industry by 1998-2000. Phelps Dodge is the most attractive stock for capital gains for the next three to five years.

The rise in the prices of copper and aluminum fueled upward movement in the stocks of diversified metal companies over 1994. Increased demand from overseas has helped metal companies prosper, despite the rising interest rates domestically, which could work to slow down demand in the US. However, the use of aluminum in cars should increase in 1995, improving demand for the metal in North America. Although stock prices might not increase much more in 1995, they should remain strong.

The aluminum and copper industries are evaluated. Aluminum stocks are not a good investment in late 1994 due to the lack of profitability within the industry. Although the outlook is better than it was earlier in the year, due to increasing product demand and decreasing production figures, the price increases are still not significant enough. On the other hand, the copper industry has had a high demand for its product which has resulted in a decreasing supply. The financial outlook for the industry is excellent.

The aluminum industry is expected to experience below-average performance through 1997-1999, and the copper industry is expected to have good long-term prospects. Aluminum stocks have been reduced, which has helped to boost prices. Copper prices are expected to decline through the end of 1994. Investments in the copper industry should focus on companies such as Magma Copper and Phelps Dodge.

The aluminum industry was adversely affected by exports from the former Soviet Union and industry leaders met to cut production to raise prices during 1994. Demand for aluminum in Japan and Europe is low, but US industries, such as auto and building, are buying more. The industry should break even in 1994, but prospects grow strong for 1997 through 1999. However, for the short-term, the aluminum industry stocks are not a good buy. Copper prices will stay at current levels, but will rise to 95 cents per lb in 1995.

The long-term outlook for aluminum company stocks is good, but the short-term outlook is plagued with problems such as high inventories and an overabundance of imported products from the Commonwealth of Independent States. Similarly, copper prices will remain about the same during 1994 while the economy recovers, but long-term prospects for the copper industry are strong. Investors should consider both metals as good long-term investments, but short-term investments are risky.

Aluminum companies are likely to perform poorly in the near future because of depressed economic conditions and an oversupply of exports from the former Soviet Union. The copper industry has experienced weak prices caused by both poor demand and oversupply. Copper prices are expected to be driven by rising demand from 1996 through 1998, which should bode well for the earnings of some companies in this field. Copper prices are expected to stay in the range of 80 to 85 cents per pound in 1994.

(NYSE) Year ended May 31 (in millions) 1991 1990 Revenues $267.5 $297.4 Net income (loss) ($44.0) $17.6 Earnings a share $2.74 $1.09 Brush Wellman, based in Cleveland, is the parent [...]