The frustrating reality of investing in commodity
companies/stocks is that the stocks are not always (or even often)
performing their best when the company’s financials are at their best,
and vice versa. While Nucor (NUE) posted an excellent set of results for the third quarter, and along with Steel Dynamics (STLD)
continues to reap the benefits of robust metal spreads, the shares have
basically matched the S&P with a mid-to-high single-digit decline
over the past few months.
It is possible that this
steel cycle may prove to be “stronger for longer”, but I believe 2018 is
quite likely the peak EBITDA year for Nucor for at least a few years.
Even though the shares trade for what appears to be a low forward
multiple on EBITDA, it’s tough to make profits in steel stocks when
prices are falling, capacity is rising, and investors have moved on to
sectors that they believe have/will have better earnings momentum.
Read the full article here:
Nucor Reaping Fat Profits, But Worries Of Prices And Capacity Loom Over The Stock
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