It’s been an interesting six months for Insteel (IIIN) since my last update on this under-followed manufacturer of steel reinforcing products. While pricing and volume have been strong, as has manufacturing leverage, and Insteel saw a favorable ruling in anti-dumping cases against imported reinforcing products, the shares have corrected on what I believe are growing concerns of an approaching peak.
In my last article, I said that I saw upside into the $40s on the passage of an infrastructure bill, and that happened in March, May, and early August, but the shares have pulled back almost 20% since then. I think there’s a “this is as good as it gets” concern in play with Insteel, and I understand that to a point, though I do think the infrastructure bill will be a positive for underlying demand. I could see another move into the $40s and upside to FY’22 expectations, but I would be careful about pushing my luck with what can be a painfully cyclical stock when the cycle rolls over.
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