2 Aluminum Stocks Poised for Big Tariff-Related Gains

Key Points

• Section 232 tariffs may pose challenges to companies relying on aluminum imports, but domestic producers and fabricators have an advantage.
• Kaiser Aluminum and Century Aluminum may both benefit from the impacts of tariffs on pricing and demand.
• These two companies play different roles in the domestic aluminum industry, however, and their advantages may not be the same.

The price of aluminum has surged by almost 50% in the last year, reaching multi-year highs amid pressure due to the Iran war, domestic tariffs, and more. The shutdown of the Strait of Hormuz has had a particularly strong impact, given its critical role in the transmission of aluminum through the Middle East to other parts of the world.

Higher aluminum costs have weighed on companies relying on the metal across a variety of industries, including automotive firms like Ford Motor Co. NYSE: F and beverage firms like Keurig Dr Pepper NASDAQ: KDP. All of these businesses must prepare mitigation strategies if material costs remain elevated to protect their margins.

On the other hand, domestic aluminum firms like Kaiser Aluminum Corp. NASDAQ: KALU and Century Aluminum Co. NASDAQ: CENX may be better positioned, particularly thanks to Section 232 tariffs.

Kaiser Aluminum Could Benefit From Tariffs and Aerospace Business, But Valuation Is a Risk

Kaiser Aluminum is a producer of semi-fabricated aluminum products for a variety of different markets, including aerospace, automotive, electronics, and more. The company's earnings for Q1 2026 were very strong: more than 42% year-over-year (YOY) growth in revenue and an earnings per share (EPS) beat of $1.78, plus record EBITDA and solid guidance for the full year.

The company is seeing demand strengthen while simultaneously boosting operational execution through improved facility performance. This has allowed the firm to boost margins by about 850 basis points YOY. Additionally, free cash flow for the first quarter reached $69 million, and the firm ended the quarter with liquidity of roughly $596 million, giving it plenty of flexibility going forward.

With Section 232 tariffs including a 50% tariff on many aluminum imports and aluminum-based products, domestic firms like Kaiser could benefit. Still, as a specialized aluminum products firm, Kaiser may not be particularly dependent upon raw aluminum prices. Where Kaiser does stand out, however, is in its significant aerospace and defense business. Demand here is likely to remain strong, and multi-year contracts should provide a meaningful stability buffer—even as the auto segment faces potential headwinds from lagging demand and ongoing tariff volatility.

For investors, Kaiser could be a strong industrial materials firm with some potential tariff-related upside and lower risk than a pure commodity producer. Analysts are fairly optimistic, with half calling KALU shares a Buy. However, given that KALU shares are up more than 50% year-to-date (YTD), valuation may be a concern. Indeed, Wall Street expects more than 10% in downside potential.

Century's Exposure to Tariffs Makes It a Big Beneficiary

While Kaiser is focused on aluminum products, Century is primarily an aluminum producer operating smelters across the United States and Europe. This means the firm is heavily exposed to aluminum pricing, and tariffs may give CENX shares a big boost as a result.

Century is advantageously positioned because it not only benefits from aluminum prices that are higher overall due to tariffs, but also from the fact that it does not need to pay tariffs on most of its production, thanks to its domestic focus.

The company is planning a new smelter in Oklahoma that could help to significantly boost its domestic production capacity. Enthusiasm surrounding Century's prospects in the current tariff climate has led to a unanimous Buy rating from all five analysts rating CENX shares, as well as a consensus price target of $80. This price represents not only a 20% premium over recent levels but also essentially double the level at which CENX stock traded at the start of 2026.

Still, investors should keep in mind that Century's dependence on tariff-related prices is significant. If tariffs shift and premiums collapse, the company could see a major hit to its earnings and valuation multiples. Further, building a new smelter will cost billions of dollars, and the cash-intensive nature of the project means Century is exposing itself to financing, execution, and construction risks.

For investors keen to capitalize on the tariff-related impact on aluminum prices, there also exists the possibility of gaining exposure to the commodity itself. An exchange-traded fund like the Invesco DB Base Metals Fund NYSEARCA: DBB holds a portfolio of aluminum futures to track commodity prices directly. This approach takes the other company-specific variables out of the equation, allowing for a more direct way of gaining exposure the price of aluminum. However, DBB is exposed to a variety of metals, so it is not aluminum-specific.