Is It Too Late To Make Money With POSCO?

It’s difficult to get the timing right with cyclical stocks, as there’s often a discrepancy between what the numbers tell you and how the market actually behaves. In the case of steel, for instance, it’s common for institutional investors to start bailing once steel prices stop rising – leading to the frustrating phenomenon of strong revenue and earnings growth (as those higher prices flow through the business), low apparent multiples, and yet disappointing stock performance.

Having more than doubled from its lows in late 2015, POSCO (PKX) has indeed already enjoyed a good run, and I do have some concerns that the shares may struggle to reach apparent “fair value” if steel prices only remain steady (even if steady at very attractive and profitable levels). I do believe there’s a good argument for these shares trading at or above $100, but investors considering the shares need to be comfortable with the risk that they’re showing up late to the party and may get stuck cleaning up.

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Is It Too Late To Make Money With POSCO?