Sunday, June 2, 2019

voestalpine Almost Finished With A Fiscal Year To Forget

I was tentatively bullish on voestalpine (OTCPK:VLPNY) (VOES.VI) back in December, stating, “Although I’m reluctant to play chicken with a freight train and go against such strongly negative sentiment as is dominating steel today, the valuation on voestalpine has me sorely tempted to take a flyer on the assumption that 2019/2020 won’t be as bad as the price seems to be forecasting.”

Although the shares did pretty well for a while thereafter, rising about 20% through early April, the shares have since been pounded (down about 25% from the April highs) on weak carbon steel prices in the U.S. and EU, rising input costs, and growing questions about whether voestalpine’s “high-quality strategy” and focus on value-added products really produces a differentiated full-cycle earnings or cash flow stream.

Steel is very much out of favor, but I’m still tempted by the valuation … and that’s with a below-the-Street opinion on near-term global economic growth and steel prices. With voestalpine shares trading like they were any other steel company, and at least a few 2019 headwinds unlikely to reoccur, I’m once again considering these shares as a potential buy.

Continue here:
Voestalpine Almost Finished With A Fiscal Year To Forget

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