Value Investing

Stock to Watch:Alcoa Inc.NYSE:AA

3th of October 2013

Copyright ©Akin Yalcin, MSc.

0.Contents

- 1. Intro: What is value investing?- 2. Fundamental analysis- 3. Technical analysis- 4. Conclusion

1.What is Value Investing?

• Value investing involves buying stocks that are out-of-favor in the market due to investor irrationality.

• This irrationality, in the extreme, can often push a stock’s price well below its true value.

• A shrewd value investor seeks to determine the true value of such stocks, thus taking advantage of this type of investor irrationality.

(Source: grahaminvestor.com)

1.What is Value Investing? (2)

• Typically, value investors select stocks with lower-than-average:

- price-to-book ratio - price-to-earnings ratio - high dividend yields

(Source: Investopedia.com)

2.Fundamental AnalysisCompany Profile

2.Fundamental Analysis (2)

Comment: Relatively competitive fundamentals in comparison to industry peers

Key Fundamentals

2.Fundamental Analysis (3)Industry Peers

3. Technical Analysis10 Year Total Return Performance

3. Technical Analysis (2)Time Period: 2001-2013

3. Technical Analysis (3)5 Year Time Period

3. Technical Analysis (4)2 Year Time Period

4. Conclusion

• Stock to Watch: “Alcoa Inc.”• Relatively competitive fundamentals • Technical analysis: Fair value: +/- $13-14 • Hence: Short-term strategy: Buy $7.75-8.00 Sell $8.75-9.50 Long-term strategy: Buy $7.75-8.00 Sell $13.00-14.00