AWC is one of those shares that cannot take a trick of late with it becoming a yield trap for many investors i.e. a forecast yield over the next 12 months close to 8% is irrelevant when the stock almost halves when the broader markets rally. Citi downgraded the stock in January following its quarterly result it has questioned the company’s ability to pay a dividend based on depressed alumina prices which definition creates the big variable in AWC’s share price through 2023. Also in January US joint venture partner Alcoa reported higher costs and lower prices, not a good combination that feeds into contracting margins!
- AWC will no doubt turn strongly one day and it’s been on our radar for a while but we believe there are better alternatives in the sector and broader market. i.e. until further notice, AWC sits in the too-hard basket.
MM is neutral on AWC around $1.50
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