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Pro Analysis

Alcoa to rally more than 40% because it's a 'cash machine,' Goldman says

A worker walks among rolls of semi-finished aluminum at an Alcoa aluminum factory.
Sean Gallup | Getty Images
A worker walks among rolls of semi-finished aluminum at an Alcoa aluminum factory.

Investors should buy Alcoa shares because the aluminum company's profits will top expectations in the coming years, according to Goldman Sachs, which upgraded the company to buy from neutral.

"Strong FCF [free cash flow] generation should allow Alcoa to act on potential organic growth opportunities and return cash to shareholders," analyst Andrew Quail wrote in a note to clients Sunday entitled "Cash machine in supportive commodity environment."

Alcoa shares are up 38 percent since the Nov. 8 election through Friday's close on optimism over President Donald Trump's economic agenda.