Editor’s Note: The InvestorPlace offices will be closed from Tuesday, December 24, to Wednesday, January 1, for the holidays. The Customer Service department will be open for email inquiries only on December 26, 27, 30, and 31.

Happy Holidays!

Hello, Reader.

This holiday season, I want to share an intriguing stock that has caught my attention. This company specializes in battery metals, which are essential for today’s technological advancements, particularly in electric vehicles (EVs). Although it may not be widely recognized like some of its competitors, this company has recently reached a 52-week high, and I believe its potential for growth remains strong.

Here’s my reasoning…

The rise of electric vehicles and green technologies relies heavily on battery metals such as copper, nickel, lithium, and aluminum. This increasing demand creates robust long-term trends.

These metals are pivotal to a significant transition I mentioned over four years ago, calling it the “Second Electric Revolution.” This trend continues to gain momentum, particularly within the rapidly growing sectors of EVs and energy storage.

This is good news for Alcoa Corp. (AA), the largest aluminum producer in the United States.

Though aluminum does not receive as much attention as other battery metals, it plays a vital role in both the solar and EV industries. Alcoa’s current stock price is quite low, suggesting potential for notable gains, especially if aluminum demand increases more swiftly than anticipated. After reaching a peak in 2022 due to geopolitical tensions, the price of aluminum has since seen a decline. However, the long-term outlook points to a steady recovery.

A report by the International Aluminium Institute (IAI) forecasts a 40% increase in global aluminum demand by 2030, driven mainly by the cleantech sector. The report indicates that production will need to expand from 86 million metric tons in 2020 to 120 metric tons by 2030.

Research by Wood Mackenzie also highlights that the solar industry could see aluminum demand rise from just under 3% of total global consumption to nearly 13% by 2040.

While aluminum is not the primary material for electrification in EVs, it provides significant benefits. For instance, a Tesla Model S utilizes around 410 pounds of aluminum in its body and chassis, which helps improve efficiency. Lighter vehicles can travel longer distances on a single charge, making aluminum a preferred material for many EV manufacturers. Indeed, aluminum is the fastest-growing material in the automotive industry.

Wood Mackenzie projects that aluminum demand for electric vehicles will reach 2.4 million tonnes by 2025, growing to nearly 10 million tonnes by 2040, which would account for approximately 12% of global aluminum consumption.

While these statistics are projections, the underlying trend is clear: the need for aluminum in the EV market is on the rise, representing just one aspect of the demand from the cleantech sector.

Moreover, the IAI anticipates that renewable energy will require additional aluminum to replace traditional copper wiring in power distribution. In total, the electric sector will need an extra 5.2 million metric tons of aluminum by 2030.

The demand dynamics in the aluminum market appear solid. However, Alcoa’s current stock price does not reflect this potential, leaning toward pessimism rather than opportunity.

Nevertheless, Alcoa’s low valuation signals significant upside potential.

Smart Money Roundup

Are These AI Stocks Ready for a Comeback?

My InvestorPlace colleague Luke Lango has been analyzing the AI Boom over the past few years. While AI technology itself is not set to take over humanity, businesses that harness its power are poised for success. Luke will provide insights into the current landscape of the AI Boom and its implications for companies that are poised to excel in this technology-driven future.

The AGI Race Is on… and so Is the Race for the Best AGI Plays

As artificial general intelligence (AGI) develops, it could identify challenges that humans might overlook and propose solutions independently. However, this technology also poses potential risks, including possible new forms of conflict. The U.S. is poised to intensely pursue advancements in AGI due to its significant potential for both beneficial and adverse outcomes.