Peak Uncertainty For Universal Stainless & Alloy Products As COVID-19 Undermines Its Markets

The investment case for Universal Stainless & Alloy Products (USAP) was already difficult enough. In my last article, I said the company didn’t have much appeal to me beyond a potential trade on restocking, and now there is major end-market weakness and uncertainty to contend with for at least a couple of quarters. On top of that, USAP is squeezed for liquidity, though I do think the company has a path through that squeeze.

I do believe there are suppliers to the aerospace, heavy industry, oil/gas, and other stressed markets that are worth considering today (I said as much recently in reference to Hexcel (HXL)). I’m not quick to add USAP to that list, as the company has long struggled to really get its premium alloy business growing and contributing to meaningfully higher margins. I do believe aerospace, machine tooling, oil/gas, and other markets will all recover, but I don’t see much more than speculative appeal to USAP at this point.

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Peak Uncertainty For Universal Stainless & Alloy Products As COVID-19 Undermines Its Markets