Alcoa (NYSE:AA) Still Has More Upside

Alcoa (NYSE:AA) appears to be in a strong place to grow, even after their 40 percent gain over the last four months.

One of the positive factors in the company was the strategy by management during the worst part of the recession to focus on cutting costs to the bone, positioning themselves for the time when a recovery would come.

In the short term (2011), Alcoa may still be under some pressure, but when you extend it out through 2013, they look like they could be a strong stock to be holding.

Now that costs are under control and pared, Alcoa isn't that hard to understand or measure. You have demand for aluminum, aluminum prices, and for the most part China. Look at those three factors, and you have the Alcoa story.

The good news for Alcoa and other aluminum producers is China has encouraged the cutting back of aluminum production domestically because of energy factors. That leaves a hole to be filled, which should benefit Alcoa going forward.

If they are also able to get a bigger foot in the aluminum ETF market, which is a completely new one, Alcoa has a strong position for a nice run over the next several years.

Questions on how fairly the company is priced are of course legitimate, but again, that depends on the range of time you're measuring them by.

If several years, Alcoa looks strong, if only for 2011, you many want to hold off, although they could get some more upward movement before the end of the year.

Alcoa was trading at $16.43, up $0.64, or 4.05 percent, as of 2:31 PM EST.