There's only just so much you can do as a metal producer when apparent demand in your key markets falls over 20% in a quarter, and I believe Acerinox's (OTCPK:ANIOY) during this downturn supports the general notion that they have high-quality assets and a good management team. Recoveries in markets like appliances and process industries does support a brighter outlook, but the next few quarters are still likely to be challenging.
Longer term, I still like Acerinox and the shares do look a little undervalued next to the quality steel producers in North America and Europe. Since my last update, these shares have lagged peers like Aperam (OTC:APEMY) and Outokumpu (OTC:OUTKF), though not by much with Outokumpu, as well as quality steel names like Steel Dynamics (STLD), but have outperformed others like ArcelorMittal (MT).
The addition of VDM gives the company some meaningful growth and synergy opportunities, and I think there is more management can do with its asset base once the market recovers. Steel, whether conventional or stainless, is really not a market that supports buy-and-hold, but I believe there is upside in Acerinox as a recovery cycle trade.
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