I didn't see a lot of upside in the shares of Steel Dynamics (STLD) after the company's fourth-quarter
earnings, and with the shares up only slightly since then, I don't feel
like I've missed out on much. It's not really a Steel Dynamics-specific
issue, though, as Nucor (NUE) and voestalpine (OTCPK:VLPNY) have likewise underwhelmed, while Gerdau (GGB) and Ternium (TX)
have outperformed. The biggest issue seems to be a version of the
all-too-familiar "what you have done for me lately?" - steel prices have
been strong, but the prospects for further gains seem limited, and
investors often buy into rising prices and then don't stick around for
the follow-through.
The valuation on Steel Dynamics
is a little more interesting now, though, and the company is executing
on several quick-turn projects that will augment its growth potential.
There are also still longer-term opportunities including significant
M&A and ongoing share gains in the market. All of that said, I'd be
careful about including this stock in a long-term portfolio as the
cyclical swings can be rough.
Read more here:
Can Improved Operating Performance Light A Fire Under Steel Dynamics?
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