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[TIckerTape$$$]

BUY changed to WATCH (5/13/2009)- original posted below update

Update on 5/13/2009- CENX broke through it's minor support level and is now in a downtrend. I would not consider adding positions until $4 range currently.

CENX, $7.33 on 5/9/09, annual high of $80.52, annual low of $1.04

Target entry price: Ideal Buy is on a pullback at $6.15- this area represents a recent gap up which should act as a moderate support level from further downside risk. Volume for the week was very high with 4 solid days of approximately double the average daily volume (average trading volume close to 6 million shares each day).
If it goes lower than $6.15, dollar cost average down.




Century Aluminum Company owns primary aluminum capacity in the United States and Iceland, as well as an interest in alumina and bauxite assets in the United States and Jamaica. Century's corporate offices are located in Monterey, California.

This is a deep value play that has large upside potential as pricing of aluminum increases. The actual tangible value of the company is at least $7 per share. The recent facility in Iceland alone would cost another company more to build than they could currently buy the entire company of CENX ! Aluminum is currently close to 70 cents per pound. Century Aluminum average cost is around 80 - 85 cents per pound, meaning they are currently not profitable nor can they be profitable at these levels (except the Iceland facility average cost of production is lower than the 80-85 cent mark). These problems are NOT unique to Cenury Aluminum as all aluminum companies are in cash burn mode at these prices, which is resulting in cost cutting measures and production cuts throughout the world. As supply is diminished, pricing power will revert back to profitable levels. Century currently has enough cash to last through the 3Q of 2010 at current cash burn rates (and no near term debt concerns), assuming they do nothing else (i.e. no capital infusions, production cuts, etc..). For every 1 cent that aluminum prices move above their break even cost of production, the company earns 10-12 cents per share. For example, assuming break even cost is 85 cents a pound, a move to $1.00 a pound would equate to $1.50 - $1.80 in earnings. Applying a moderate 10 times P/E multiple gives excellent upside potential for the next 2 year timeframe. Consider that aluminum traded around $1.45 a pound less than a year ago and you can see how this could be a long term winner if pricing reverts back to 2008 levels. However, I would NOT expect aluminum prices to return to these levels in the next 1-2 years, but I would expect to see a steady rise in prices from the current levels. Increased demand for raw materials from emerging markets and China should help to continue to bolster the case for hard assets (not to mention the very real possibility of inflation). For more information on prices of commodities, I would direct you to InfoMine - Mining Intelligence and Technology.

Disclosure: Bought CENX under $4 and sold around $8. Will add positions back on pullbacks to teh $6 range or lower assuming no new negative news emerges about the company.

Summary
Century Aluminum Company (Century Aluminum) is a holding company engaged in producing aluminum. The Company’s principal subsidiaries are Century Aluminum of West Virginia, Inc. (Century of West Virginia), Berkeley Aluminum, Inc. (Berkeley), Century Kentucky, Inc. (Century Kentucky) and Nordural ehf (Nordural). Century of West Virginia operates a primary aluminum reduction facility in Ravenswood, West Virginia (Ravenswood). Berkeley holds a 49.7% interest in a partnership, which operates a primary aluminum reduction facility in Mt. Holly, South Carolina (Mt. Holly) and a 49.7% undivided interest in the property, plant, and equipment comprising Mt. Holly. The remaining interest in the partnership and the remaining undivided interest in Mt. Holly are owned by Alumax of South Carolina, Inc., a subsidiary of Alcoa (ASC).

Century Aluminum

[tman17m]

nice summary. i day traded some of this last week for a little profit. was considering getting back in but 8ish was a little high for me. maybe next week now that its dropped some. definitely keeping a watch.

[GreG]

I also got in on this one after thier earnings a few weeks ago. Im up 100% now and still holding. Im long on this one, mabye two years. I belive it will get to $40 when aluminum takes back off. Great post TickerTape

[TIckerTape$$$]

Originally Posted by lattes Nice pick, I wish we had this forum up earlier b/c I have been watching AA for an entry (Had an order in for $4.92 the day it hit its low of $4.97 a couple days after it cut the dividend) but I think CENX is a better value as far as aluminum goes. As a note on aluminum, anyone notice that aluminum foil hasn't gotten any cheaper at the grocery store?

I missed Alcoa also. I was watching it the day it dropped to the $5 area and wouldn't pull the trigger. After watching it quickly double, I started actively searching for an alternate aluminum company and it came up in one of my stock scans. I started doing my research and was lucky to uncover a gem. Credit Suisse puts out some excellent research on the company, which is where I got a lot of my initial research.

I'm just hoping to get to buy it again!

[VicVan]

yee har
I want this stock but want the market to get nailed some - looks a bit fat at $6 but if it doesnt come down will take a 50% buy at the bigger price

[TIckerTape$$$]

As per my original post, I re-entered a position today (5/12).

Intraday move put CENX at $6.10 for the low, triggering my buy at $6.15. Closed the day at $6.51, down for the day but on lighter volume compared to last week.

I am pretty bearish on the overall market, so I will look to sell on any quick move upwards and be content to take my short term profits.

Anyone else get in on this trade?

[tman17m]

yeah, i bought some yesterday at 6.70 and sold first thing this morning at 7.30. bought more at 6.20 but got kinda scared when it was coming back down and ended up selling at 6.26. well, im kinda bummed that i didnt hold to 6.50, but, as i always say, im never gonna be mad about makin money on a day trade. might buy more tomorrow morning, we'll see how the market looks

[Sam]

Hey! Good Post.
I was looking at this company at earnings. They definately have decent liquidity until the end of 2010 - but my understanding was that they were having seious issues with production - namely 2 of their smelters down.

Has this been corrected?

What are your thoughts on Alumina?

[TIckerTape$$$]

Originally Posted by Sam Hey! Good Post. I was looking at this company at earnings. They definately have decent liquidity until the end of 2010 - but my understanding was that they were having seious issues with production - namely 2 of their smelters down. Has this been corrected? What are your thoughts on Alumina?

I'm not certain what issues you are referring to, unless you just mean the production cuts in general. Here's an older article that may be of benefit.

Century Aluminum may soon shut more smelter output | Reuters

As far as Alumina, I do not follow them, so I have no opinion. Just browsing the quick news on them, it seems like they are more burdened by near term debt and have capital costs for their share of expansion projects in Brazil. Looking at the technicals on them, I would not touch them at this price. If I did the research and found that I thought the fundamentals were there for the company, I would wait for a breakout above the $5 level on increasing and / or high volume. If you look at the chart for Alumina, it looks more to me that you had a stock that went from $2 to $4 as it moved with the overall market- volume levels have basically been the same on its move from $2-$4 which makes me pause. Compare that with CENX, and you will see much greater volume in early April and the beginning of May, which is when I initially bought in around the $4 range. I rode up and took my profit at the $7-$8 range (can't remember exactly). I'm comfortable holding this stock for the long term, but if I were to get a quick pop in price in the next day or two, I will most likely take my profits.

[GreG]

Fewer smelters = less aluminum =higher demand= higher share price on CENX! Congrats on VIP status TickerTape$$$