Monday, March 2, 2020

Ternium Hammered On Risk Aversion And Economic Uncertainty

Ternium’s (TX) performance since my last update has not been good, with the shares down about 17%. That’s better than the performance of steel peers like ArcelorMittal (MT), Nucor (NUE), and Steel Dynamics (STLD), but “less bad” is only worth so much. Honestly, I found the reaction to the company’s fourth quarter miss relatively restrained, but now there are a lot of worries about what the coronavirus may mean for a number of economies, and that’s on top of what was already a lot of uncertainty about the outlook for Mexico in 2020.

I still like the long-term value proposition here, but buying into sharp market declines often feels like playing chicken with a freight train. Ternium remains a well-run steel company with above-average profitability and exposure to attractive markets, but this is not a good stock for nervous investors.

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Ternium Hammered On Risk Aversion And Economic Uncertainty

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