We recently published a list of 10 Best Aluminum Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Kaiser Aluminum Corporation (NASDAQ:KALU) stands against other best aluminum stocks to buy according to billionaires.
Aluminum is one of the most essential and versatile materials required by modern industries. It is known due to its unique qualities including its lightweight nature, corrosion resistance, and efficient recyclability. As industries move toward sustainability and efficiency, aluminum is seeing an increase in its demand. In 2023, its global market was valued at $229.83 billion, which is forecasted to grow to $403.29 billion by 2032, a compound annual growth rate (CAGR) of 6.2%, according to Fortune Business Insights. As demand rises for electric vehicles (EVs), green energy, and lightweight manufacturing, aluminum is becoming an attractive investment.
One of the big reasons why aluminum is seeing a rise in demand is its usage in electric vehicles. Heavier metals are being replaced with aluminum to increase fuel efficiency and driving range by automakers like BMW and Mercedes. The U.S. aluminum market is expected to reach $43.05 billion by 2032 as EV manufacturers ramp up the use of aluminum in order to make vehicles lighter and more energy-efficient. Furthermore, the aerospace industry also plays a key role in its demand. As global air travel recovers, Boeing and Airbus are ramping up production, relying heavily on aluminum alloys for fuselages and wings.
Additionally, the packaging industry is booming as companies make use of aluminum’s 100% recyclability. Aluminum-made beverage cans contain 3x to 12x more recycled material compared to other materials, resulting in less wastage and energy consumption, as per The Aluminum Association. The circular economy is gaining momentum as manufacturers rely on recycled aluminum in order to cut costs and emissions. Moreover, recycling aluminum saves energy that goes toward producing new metal, making it a leap forward in sustainability efforts.
While demand for aluminum increases, the trade war over metals is gaining traction. According to The New York Times, U.S. President Trump recently reintroduced 25% tariffs on imported aluminum to protect U.S. manufacturers. While this move will raise costs for automakers, beverage companies, and construction companies relying on imported aluminum, the domestic producers may benefit. On the other hand, Canada and European countries are retaliating with reprisal tariffs, increasing global supply chain uncertainty. Producing 45 million metric tons of aluminum annually, China has capped its output. This implies that the increasing demand will be fulfilled through recycling and secondary sources. Thus, the global supply chain can face uncertainties and lead to price rises as U.S. tariffs escalate trade tensions.
Furthermore, an important stride in the aluminum space is the increase of aluminum-ion batteries. These are considered potential alternatives for lithium-ion batteries, as they offer faster charging, longer lifespan, and decreased costs. According to Future Market Insights, the market for aluminum-ion batteries is forecasted to grow to $9.5 billion by 2035 due to demand for renewable energy and electric vehicles. Considering that aluminum is cheaper and more abundant than lithium, this transition could transform energy storage and transportation.
On the other hand, billionaire investors are increasing their investments in the aluminum industry, reflecting strong confidence in its growth potential. Blackstone CEO, who is supporting U.S. aluminum tariffs, expects domestic manufacturing to propel, as reported by Reuters. Concurrently, AI Circle reports that Malaysian tycoon Koon Poh Keong and Song Zuowen, a Chinese billionaire, are increasing their investments in aluminum ventures through strategic stake swap. Furthermore, aluminum stocks are giving a return of 4.32%, year-to-date, surpassing the broader market’s -4.13% performance. Thus, these billionaire-backed entries reflect the industry’s strength and future potential.
Our Methodology
To come up with the Best Aluminum Stocks to Invest in According to Billionaires, we looked into Insider Monkey’s database for billionaire stock holdings as of Q4 2024. We placed the stocks on the basis of the number of billionaires that have invested in them, as it reflects strong institutional confidence.
In the case where stocks had the same number of holders, we used the total value of billionaire investments to break the tie. Furthermore, this list includes stocks backed by some of the most accomplished hedge fund managers and business leaders, offering perspective into where billionaire investors are allocating their capital.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An aerial view of an aluminum mill, showcasing the company’s production capabilities.
Kaiser Aluminum Corporation (NASDAQ:KALU)
Number of Billionaires: 6
Number of Hedge Fund Holders: 14
Kaiser Aluminum Corporation (NASDAQ:KALU) is one of the top suppliers of specialty aluminum products for the aerospace, automotive, packaging, and industrial sectors.
The company’s net sales surpassed $3 billion for the year ended December 31, 2024, with conversion revenue of $1.46 billion, a 1% decrease from 2023. Kaiser Aluminum Corporation (NASDAQ:KALU) saw an improvement in adjusted EBITDA to $217 million, achieving a 60-basis-point-margin increase, its second consecutive year of growth. It observed stable demand for its aerospace and high-strength segment, although commercial aircraft inventory changes impacted shipments. Regardless, the company expects a rise in production rates in 2025 as the aircraft backlog is increasing.
On the other hand, its packaging segment remained a top priority, as its Warwick facility expansion is ready to drive long-term revenue. The recently commissioned fourth roll coat line will improve the production of coated packaging products, as shipments are expected to increase by mid-2025. The packaging conversion revenue is expected to increase between 20% and 25% this year, with its full benefits actualizing in 2026. General engineering and automotive sectors also emanated strength, with moderate growth forecasted in 2025.
Moreover, Kaiser Aluminum Corporation (NASDAQ:KALU) signed an early labor agreement with United Steelworkers at key facilities, ascertaining operational stability through the decade. It is also evaluating the potential effects of new aluminum tariffs, with the initial assessments pointing to a neutral to positive impact. Overall, strong free cash flow generation, efficient capital allocation, and debt reduction remain top priorities, backed by a liquidity position of $572 million.
Looking forward, the company is expecting full-year revenue to grow between 5% and 10%, with improvements in EBITDA margins by up to 100 basis points. Driven by near-completion investments and stabilizing demand, Kaiser Aluminum Corporation (NASDAQ:KALU) expects 60% of 2025 EBITDA to come through the latter half of the year, adding to its long-term growth trajectory. As such, it is one of the best aluminum stocks to buy.
Overall, KALU ranks 10th on our list of best aluminum stocks to buy according to billionaires. While we acknowledge the potential of KALU, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KALU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.