Could Alumina Limited be a better investment than Apple?

Australian aluminum producer Alumina Limited (AWC, quote) has a higher profit margin, projected growth rate, and dividend yield than Apple (AAPL, quote) – but the stocks are going in opposite directions. 

Image courtesy Alumina Limited: http://www.aluminalimited.com/image-library/

Alumina's Jamalco Refinery in Jamaica

That’s good news for investors who want to heed Warren Buffett’s advice and “buy when others are fearful.”

Apple is up 79.54% over the last year, while Alumina has fallen 47.24%. This is because slipping growth in China and India has led to lower demand for aluminum and other industrial materials, as seen by the 12.86% decline in iShares S&P Global Materials (MXIquote), the exchange traded fund for materials.

On a five-year basis, the company’s sales and earnings-per-share growth have dropped significantly. But there are a number of bullish indicators suggesting a future that is even more robust than Apple’s.

The price-to-earnings-growth ratio for Alumina is a strong 0.74. So is its profit margin and its five-year projected earnings-per-share growth, which at 33.60% is again better than Apple’s. The dividend yield is 4.57%, putting Apple’s recent 2% dividend to shame.

Now trading around $5.13 a share, the mean analyst target price over the next year for Alumina Limited is $5.31. With its strong dividend, modest debt load and bullish indicators, AWC is a stock to buy and hold for future growth. 

  • http://alephblog.com David_Merkel

    Never been crazy about firms that perpetually run w/neg working capital. Interesting idea, though.