AK Steel Demonstrates Strength

Ohio-based AK Steel Holding Corporation (AKS - Analyst Report) is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. We expect that AK Steel’s cost reduction efforts and renegotiated higher-priced contracts will prevent excessive margin deterioration in light of higher commodity costs.

The company has greater product diversification compared to its peers and is focusing on markets and products which have the greatest long-term potential to succeed. We believe the company will gain from new projects, higher selling prices and increased shipment.

On November 11, AK Steel announced that it is temporarily idling its Mansfield, Ohio operations and most of its Ashland, Kentucky operations due to the recent unanticipated and major downturn in the economy, which has resulted in sharply lower demand for some of the company’s products. Both the facilities will remain idle until early to mid-January.

AK Steel has a sound liquidity position with no significant debt maturities in the near term. It reported a robust 70% increase in profits in the third quarter of 2008. Currently, shares of AK Steel are trading at 1.2x our 2008 EPS estimate of $4.35. We reiterate the Buy rating and retain our six-month target price of $10. This is 2.3x our 2008 EPS estimate.

Read the full analyst report on AKS

Read the full analyst report on AKS