Analyst Carlos De Alba upgraded shares of Alcoa , Teck and Nexa to overweight from equal weight, noting he is turning "selectively more positive" on certain mining stocks where they see opportunities for deep value or self-help stories. Alcoa has a strong cash cost curve and capacity cuts to smelting, which is a term use to describe the process of extracting metal from its ore, De Alba said.
"We are only selectively upgrading mining stocks, those where we see deep value and/or self-help stories amid persisting macro/China recovery uncertainties," the note said. De Alba emphasized caution on the sector due to macro uncertainties in China that kept upgrades conservative despite what they see as attractive valuations, strong cash flow generation, capital expenditure declines and low leverage.