We recently compiled a list of the 10 Undervalued Stocks with the Highest Upside Potential. In this article, we are going to take a look at where Alcoa Corporation (NYSE:AA) stands against the other undervalued stocks.

The stock market has been more erratic with investors reacting to heightened trade tensions and new tariffs. On March 5, it was reported by BBC News that America imposed a 25% tariff on Mexican and Canadian imports and a 10% tariff on Chinese imports. China retaliated with tariffs of between 5% and 15% on selected American imports and Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum stated that retaliatory measures would be on the agenda. These tariffs have been a cause of concern over heightened business costs, supply disruptions, and a more general slowing of the global economy.

Against this backdrop, the S&P 500 fell sharply with over 80% of its constituents in red, CNBC reported. A handful of investors used the pullback to scoop up battered stocks and most notably those with solid fundamentals that have underperformed in recent months. Richard Fisher, a one-time president at the Dallas Federal Reserve, explained in a CNBC TV appearance that tariffs are a hidden tax that impose cost and have the ability to slow growth as companies adjust to higher cost. With market sentiment being very sensitive to policy and macroeconomic conditions, investors are searching for undervalued positions that can weather short-term fluctuations and generate long-term growth.

In such a scenario, investors are turning towards companies with good valuations, good growth in earnings and revenue growth rates, and sustainable competitive advantage. Value investing, where one tries to acquire stocks at a price that is lesser than their intrinsic value, is a well-tested and trustworthy means to navigate through uncertain markets.

Our Methodology

In order to allow investors to capitalize on current market imbalances, we used stocks screeners to select ten stocks that meet rigorous tests for value. We looked for firms with a forward P/E of less than 20 and a minimum average upside potential of 30% based on analysts' target prices in an effort to supply a portfolio of solid undervalued candidates. The stocks are ranked in ascending order of analysts' upside potential. The information was obtained on March 6, 2025, from CNN.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Industrial workers carrying out the complex production process of alloy ingot at a factory.

Alcoa Corporation (NYSE:AA)

Forward P/E Ratio: 8.49x

Upside Potential: 54%

Number of Hedge Fund Holders: 47

Alcoa Corporation (NYSE:AA) is a worldwide aluminum producer with mining, refining, and smelting operations. Industrial demand worldwide has made Alcoa a global leader in the automobile, aerospace, and packaging industries.

Alcoa Corp. (NYSE:AA) reported Q4 2024 EPS of $0.76, 9.8% down from a year earlier due to declining aluminum prices. The company is, however, increasing low-carbon aluminum production in parallel with heightened demand for green metals for EV and renewable energy applications.

The company is investing in bauxite mining and refining of alumina and is driving cost and operational efficiency through restructuring. Future growth is supported by investment in industrial and infrastructure activity in emerging economies.

The analysts project a 54% rise from current price levels. Market trends, aluminum pricing, and cost-cutting initiatives will be reported in April 2025 with the next earnings announcement.

Overall AA ranks 5th on our list of the undervalued stocks with the highest upside potential. While we acknowledge the potential of AA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.