The stock that’s doubled in a month

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.

Read More Century reports 4Q loss

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.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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