Ternium Caught Between A Valuation-Sentiment Tug Of War

Ternium (TX) shares have risen 20% since my last update on this Mexican steelmaker, a pretty respectable result next to Nucor (NUE), POSCO, (PKX), Steel Dynamics (STLD), but not so impressive when compared to ArcelorMittal (MT) or Gerdau (GGB), and more or less in line with Voestalpine (OTCPK:VLPNY), another steelmaker with above-average auto exposure. You almost wouldn’t know it, though, as sentiment on the sell-side is still very cautious, if not outright negative, due to weak near-term demand conditions in two of Ternium’s key markets (Mexico and Argentina).

Near-term versus long term is almost always a tough dyad to reconcile in investing, and particularly so in the “it’s always near-term” world of commodities. I do believe that Ternium is going to have a challenging 2020, and I likewise believe that some peers like Gerdau will have a much better time of it. Still, given the quality of the company and the valuation, both intrinsic and relative, I still think this is a stock worth buying and owning here.

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Ternium Caught Between A Valuation-Sentiment Tug Of War