Despite the strong jobs numbers for April, the overall economic outlook heading toward the second half of the year remains grim. Against a backdrop of elevated interest rates and recent bank failures, the odds of a recession hitting later this year are up to 64%. It’s an environment almost tailor-made to keep investors nervous – and looking for ‘recession proof’ sectors.
In a recent report from JPMorgan, analyst Bill Peterson sees just such an opening in the aluminum sector. Peterson has taken a deep dive into the complexities of aluminum production and products, and found that the sector presents a number of advantages that should provide long-term support, even in a downturn.
“Aluminum’s light weight and recyclability mean it will play a key role in the transition to a greener economy… J.P. Morgan’s Commodities Research team sees demand for aluminum in EVs, wind, and solar growing from around 2.4Mt in 2020 to 3.8Mt by 2025, reflecting a ~10% CAGR, which we think has significant potential for upside on the accelerated adoption of EVs based on IHS’s forecast of 23% and 45% penetration by 2025 and 2030, respectively,” Peterson explained.
Peterson isn’t just analyzing the aluminum industry as a whole, he’s also putting his finger on two stocks that he sees as winners. In fact, he’s projecting more than 40% growth potential for both of them. According to TipRanks, the premier source of analyst insights and research, these stocks also boast significant double-digit upside prospects, as evaluated by other analysts in the field. Here are the details.
Constellium SE (CSTM)
We’ll start with Constellium, a Paris-based global industrial leader, with a strong position in the manufacture of aluminum products. The company also works at the development of new uses for aluminum, and is a leader working with recycled aluminum metal. Constellium is known for its advanced alloys and engineering, and its aluminum products are found in a range of applications, from the simple soda can to aircraft, cars, and packaging.
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