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After Hours Action: Alcoa

Shares of Alcoa waffled in extended trader after the company kicked off earnings seasons with results that beat expectations.

The aluminum producer reported first-quarter earnings of 28 cents a share, a penny higher than estimates. The company was seen earning 27 cents a share on revenue of $6.07 billion, according to a consensus estimate from Thomson Reuters.

"Our outlook for the rest of 2011 and beyond remains very positive due to the world's growing population (and) increasing urbanization," Chairman and Chief Executive Officer Klaus Kleinfeld said in Monday's earnings release.

Alcoa also said sales rose 22 percent to $5.96 billion from $4.89 billion a year ago due to a growing demand for aluminum products in major end markets such as packaging, automotive, transportation and industrial products.

"Autos revenue growth was up 30% quarter over quarter, explains host Melissa Lee. "Autos generated the lions share of that growth," she says.

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Guy Adami thinks the Street will grow concerned that Alcoa's big revenue gains were tied to autos. "The Street (probably) won't think they can sustain that kind of momentum given the slow down in the auto market." He also says valuations are fair but $18 is probably the top of the range in Alcoa. He expects to see the stock trade down to $16.75.

Joe Terranova is focussed on the 50-day moving average, which is around $16.85. "It's a nice point of reference," he says. He'll be waiting to see if it holds. "If it closes below that level I'd take some off," he counsels.

In a Reuters interview Stephen Massocca of Wedbush Morgan echoes what Adami and Terranova are saying. Massocca too cautions that “Alcoa's had a big run, so I don't think you're going to see a lot of upside from this number."

Tim Seymour thinks the sell-off may present a buying opportunity. "Not right away," he says. But he thinks it's a stock worth keeping on the radar. "People are throwing too much cold water on the auto trade," he says.

Zach Karabell cautions investors not to extrapolate too much from Alcoa earnings. "That's a mistake we make because it reports first," he says. "They are a high cost provider and they're not really levered to the industrial buildout."

And in the interest of full disclosure, Karabell says he's short Alcoa, "But only because I'm short Alcoa. It's not a read on the global industrial economy."



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Trader disclosure: On April 11, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Weiss is short (X); Weiss is short (RTH); Weiss is short (IWM); Weiss owns (VZ); Weiss owns (QCOM); Weiss owns (DVN); Weiss owns (COP); Weiss owns (BTU); Weiss owns (JPM); Weiss owns (MSFT); Terranova owns (JPM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (TCK); Terranova owns (BAX); Terranova owns (XOM); Terranova owns (AKAM); Karabell owns (AAPL); Karabell owns (BHP); Karabell owns (BIDU); Karabell is long (GOOG); Karabell owns (GS); Karabell owns (MRVL); Karabell Owns (SINA); Seymour owns (AA); Seymour owns (AAPL); Seymour owns (F); Seymour owns (INTC)

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