When I last wrote about Steel Dynamics (NASDAQ:STLD), I found it a little strange that the shares had been left behind in the short-cycle industrial recovery. Although I wasn’t, and still am not, all that bullish on pricing, given considerable under-utilized capacity in the industry and more capacity coming online in the near future, I thought upturns in steel-consuming markets like autos and heavy machinery and ongoing near-term strength in non-resi construction would support a better demand outlook.
Since then, Steel Dynamics raised guidance for the third quarter on stronger shipments to the auto and non-resi construction end-markets, and the shares have risen about 17% since then, outpacing industrial stocks and closing that gap I had seen before. With that two-month move, I see the shares now more as “fairly-valued” rather than particularly cheap, and while I wouldn’t be in a rush to sell on this momentum, I do think the risk of weaker non-resi markets in 2021-2022 remains a meaningful consideration.
Read more here:
Steel Dynamics Getting More Of Its Due As Demand Starts To Recover
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