Predicting how investors will react to particular pieces of news can be difficult, and I look at Mexico’s Ternium (TX)
as a case in point. You might think that weak demand in Mexico, an ugly
situation in Argentina, and a struggling rebound in Brazil would all be
pressuring the stock, not to mention the announcement that Steel Dynamics (STLD)
is planning to build a large (3Mtpa) plant that will export to Mexico,
would pressure the stock, but Ternium has held up better than many
others in the steel sector, including Steel Dynamics, Nucor (NUE), POSCO (PKX), and ArcelorMittal (MT).
Even
with this recent run of better (or at least “not as bad”) performance,
the shares don’t look expensive. While the pricing concerns that trouble
me with Nucor and Steel Dynamics do apply here as well, as does the
concern about buying shares into what is likely to be declining EBITDA, I
believe Ternium could return to growth sooner and that valuation is
even less demanding.
Click here for more:
Despite A Host Of Challenges, Ternium Is Holding Up
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