Shares of metals maker Century Aluminum have more than doubled in the past month, but traders don't expect much further upside.
Century Aluminum shares surged 21 percent on Monday after jumping 15 percent on Friday. The fundamental impetus is the earnings report Century released after Thursday's closing bell, in which the company announced it lost 50 cents per share. That beat dour expectations amid continued trouble in aluminum production businesses.
While the stock surge may be impressive, S&P Investment Advisory equity chief investment officer Erin Gibbs cautioned against reading too much into the post-earnings pop. After all, the smaller magnitude of the stock's loss merely reflects the fact that the company has been able to cut capacity more quickly than anticipated, Gibbs pointed out.
"They haven't yet had any stabilization," Gibbs said Monday on CNBC's "Trading Nation." "They seem to be continually reacting and cutting back capacity; there doesn't seem to be an end to it yet. And we don't see any plants where they're cash-flow-positive or even neutral yet, so we'd just stay away."
There could also be a big element of short-covering to the stock's bounce. According to FactSet, 31 percent of the company's floating shares are held short. And indeed, even after the past months' gains, the stock is still down nearly 70 percent in the past year.
Of course, a short-covering upside shock in the midst of an epic decline doesn't exactly shout out "stock you want to own."
In fact, from a technical perspective, Ari Wald of Oppenheimer says the Century Aluminum chart is beginning to run into a zone of "resistance," "so after very strong gains, we'd be suggesting investors lighten up here."
Meanwhile, the stock — which is contained within the S&P small-cap index — is not exactly a Wall Street darling. Even in the buy-heavy world of Wall Street sell-side research, 67 percent of shops covering the company rate it "hold," according to FactSet.