voestalpine Likely Facing The Worst Of The Cycle

Investors have warmed back up towards steel stocks, assuming that 2019 was as bad as it’s going to get for the cycle and that responsible behavior on the supply side and improving steel demand will support prices and margins next year. With that, voestalpine (OTCPK:VLPNY) (VOES.VI) has gone along for the ride in recent months, rising about 25% from its August and October lows despite a recent warning on impairments and a cut to the dividend (both of which I think were, or should have been, largely expected).

I was pretty neutral on the stock in June, and while it has swung around quite a bit (rising about 15% before plunging 30% and then chopping higher), net net, it’s basically flat with where it was back then. Even with the troubles this year, I still like this business and I think I’d rather own voestalpine than ArcelorMittal (MT), and likewise the valuation is more compelling than for Steel Dynamics (STLD) and Nucor (NUE). Although I’m not as bullish on steel as some investors seem to be, I think voestalpine is an okay idea here, and particularly so if you want to play an upcoming rebound in autos and capital goods.

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Voestalpine Likely Facing The Worst Of The Cycle