I wasn’t all that bullish on Steel Dynamics (STLD) back in January, but I did say it was worth another look
if the price fell into the $20’s. I certainly wasn’t expecting the
global Covid-19 outbreak at that point, and that makes the valuation
discussion interesting. I think the steel industry is looking at a tough
stretch (tougher than the CEOs seem to be expecting/projecting), but I
also think Steel Dynamics is among the best-run in the group, and I
think it’s better to own EAF operators than blast furnace operators
during tough times.
It’s difficult to recommend a
commodity stock given the severe disruptions across its most important
markets, let alone the meaningful capacity growth that’s coming over the
next 18 months. Still, I don’t think my expectations are that
aggressive, and the shares do look undervalued. If you can handle the
risk, this may be a name to consider now.
Click here for the full article:
Steel Dynamics Offers Value, But It's Going To Be Ugly
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