Why Alcoa Stock Jumped 32% in April

Shares of aluminum maker Alcoa (NYSE: AA) rose 32% in April, according to data from S&P Global Market Intelligence. That easily outdistanced the broader market's advance of roughly 13%. But in March, Alcoa fell a disastrous 55% compared with the 13% decline for the S&P 500, and in the first four months of 2020, the stock is down 62% versus the market's drop of just 10% or so. Clearly there's been something bad happening here.

Alcoa is focused on three main things. It mines for bauxite, a base ingredient in making aluminum, and sells part of what it digs up to others. It processes the bauxite it keeps into alumina, which is a middle step in the aluminum process, and sells some of what it makes to others. And then, from the alumina it keeps, it also makes aluminum -- all of which it sells to others.

The key thing across this value chain is that Alcoa's business is largely commodity based; it doesn't really make value-added products. That means that the company's top and bottom lines are highly dependent on often-volatile commodity prices.

Source Fool.com