The document discusses current holdings in Alcoa (AA) and Deere & Co (DE). It provides an overview of various materials sub-industries and sector leaders. Recommendations are made to hold AA due to increasing aluminum demand and prices, Alcoa's global scale and exposure across the aluminum supply chain, and its strong balance sheet. A 12-month price target of $15.32 per share is given, representing potential 30.7% appreciation from current prices.

1. Ryan Shelley
Bill McCarran
Jon Bartholomew

2.  Current Holding
 Sub-Industries
 Sector Leaders
 Materials Outlook
 Deere & Co (DE)
 Alcoa (AA)
 International Flavors (IFF)
 Recommendations
 Questions

3.  Alcoa (AA)
 Purchased 9/14/11
 152 shares @ $11.73
▪ Return since: -5%
 Deere & co (DE)
 Purchased Feb 25th 2011
 25 Shares @ $90.49
▪ Return since: -16%
▪ Sept 2011: -6.1%
 S&P Basic Materials Weighting: 3.5%
 Atkins Basic Materials Weighting: 3.8%

4.  Chemicals (IFF)
 The Chemicals Industry in the Materials Sector includes producers of
commodity, diversified, fertilizers, agricultural, and specialty chemicals. It also includes
manufacturers of industrial gases
 Construction Materials (DE)
 The Construction Materials Industry in the Materials Sector includes manufacturers of
construction materials including
sand, clay, gypsum, lime, aggregates, cement, concrete, and bricks. Other finished or
semi-finished building materials are classified in the Building Products industry
 Containers & Packaging
 The Containers and Packaging Industry in the Materials Sector includes manufacturers
of metal, glass, or plastic containers (including corks and caps), and manufacturers of
paper and cardboard containers and packaging
 Metals & Mining ( AA )
 The Metals and Mining Industry in the Materials Sector includes producers of aluminum
and related products; companies engaged in diversified metals and mining production
or extraction of gold, precious metals, minerals and related products; and producers of
iron, steel and related products
 Paper & Forest Products
 The Paper and Forest Products Industry in the Materials Sector includes manufacturers
of timber, related wood products, and all grades of paper. It includes manufacturers of
lumber for the building industry, and excludes companies specializing in paper
packaging.

5.  Du Pont 10.71%
 Monsanto 10.18%
 FreePort-McMoran 8.82%
 Praxiar 7.96%
 Newmont Mining 7.88%
 Dow Chemicals 4.82%
 Air Prods & Chem 4.49%
 Mosaic Co 4.24%
 PPG Ind Inc 3.50%
 EcoLab 3.32%

6.  GDP
 Retail +7.9%
 New home sales + 5.7%
 Auto Sales
 ISM manufacturing : 51.6 %
 Baltic Dry Index
 Durable Goods: +1.7%
 Free Trade Agreement
 South Korea, Columbia, & Panama
 China Q3 GDP 9.1%
 Europe’s Debt Agreement
 Yen Intervention

8.  Exposure to Aluminum
 Global growth driving up prices
 Alum continues to replace other metals
 Alcoa
 Market leader
 Exposed to upstream & downstream
 Trending down the cost curve
 Healthy balance sheet

9. DEMAND SUPPLY
 BRIC  China
 End Markets  Costs too high
 Transportation  Bauxite
 Aerospace  Energy Costs
 Packaging  Out dated tech
China Consumption +25% YoY
Imports +40%

11.  Worlds leading alumina & aluminum producer
 Operating in 31 countries
 Vertically integrated
Revenue by Segment Revenue by Region
Other
Engineered Alumina 7%
Products 20% Asia
17% 16%
US
50%
Flat Rolled
25% Aluminum Europe
38% 27%

12. YTD Performance vs. XLB & S&P 500
20%
10%
0%
AA
-10%
XLB
-20% S&P
500
-30%
-40%
-50%
5-Jan-11 5-Feb-11 5-Mar-11 5-Apr-11 5-May-11 5-Jun-11 5-Jul-11 5-Aug-11 5-Sep-11 5-Oct-11

13. YTD Performance vs. Competitors
30%
20%
10%
0%
-10%
AA
-20%
ACH
-30%
CENX
-40%
-50%
-60%
-70%
6-Jan-11 6-Feb-11 6-Mar-11 6-Apr-11 6-May-11 6-Jun-11 6-Jul-11 6-Aug-11 6-Sep-11 6-Oct-11
Gross EV/
Company Mkt Cap Beta Margin EBITA P/B PEG ROE D/E
Alcoa 10.78B 2.09 19.60% 5.21 .73 .33 7.53% 58.03
ACH 6.98B 2.03 6.38% 10.94 .84 17.5 1.28% 52.53
Century 891M 3.46 11.92% 5.42 .80 .72 7.94% 21.4

14. Statistic Alcoa Industry Segment QoQ YoY
Beta 2.27 1.4
Alumina -17% +120%
Div Yield 1.16% 1.38%
Primary
P/E 10.19 14.19 Aluminum -45% +41%
P/FCF 4.10 11.83
Flat Rolled -38% -9%
D/E 59.72% 29.73%
Engineered
ROE 7.53% 2.23% Product -7% +21%
Q3
•EPS: $.15 vs $.22
• -53% QoQ
• 150% YoY

15.  10/25: Received 50 yr extension for Australia mining licenses
 10/17: Assigned 2 top executives to create regional headquarters in Latin
America
 10/17: Rio Tinto divesting it’s aluminum business, selling off $8 billion assets
 9/15: $300m Expansion in Iowa to keep up with Automotive demand
 Paris Air Show: Boeing & Air Bus
 $94B over next 12-36 months
 Ma’aden joint venture finished by 2014
 LOWEST cost refinery to supply India & China
 Partnered with CIMC to develop tanker to Asia and Russia
 China Power Investment Corp.
 Partnership to provide high end fabricated aluminum products

16. •Substitution
•Low cost production
•Vertically integrated
•Balance Sheet liquidity

17. Today: $11.10
12 Month target: $15.32
Yahoo 12 mo Target: $14.50
•30.7% Appreciation

18.  Why Aluminum
 S&D driving up prices-China
 Demand from emerging markets
 Substitution factor
 Why Alcoa
 Largest global provider for a pure play-Rio
 Globally diverse w/ growing pos in China
 Exposed to up and downstream
 Stronger margins
 Strong balance Sheet