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POSCO's (PKX) Growth Initiatives Look Good: Time to Buy?

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On Jan 17, 2017, Zacks Investment Research upgraded POSCO (PKX - Free Report) to a Zacks Rank #2 (Buy) from a Zacks Rank #4 (Sell). Going by the Zacks model, companies carrying a Zacks Rank #2 have chances of performing better than the broader market over the upcoming quarters.

Over the last one month, POSCO's ADR yielded a 6.32% return; outperforming the 5.18% return provided by the Zacks classified Steel Producers industry.

Why the Upside?

POSCO intends to grow by boosting its competitiveness in steel production, focusing on new growth enterprises and improving its financial as well as managerial structure. The company has already undertaken several measures to dispose some of its profitable, but non-core assets, in a bid to improve its core competitiveness.

The company intends to reduce its low-performing domestic affiliates by 50% and overseas businesses by 30%, by the end of 2017.

In addition, POSCO conducts its trade in several industries, such as economic research and consulting, architecture, electronic commerce, forest resources development, computer hardware and software distribution, crude oil & natural gas mining, and real estate development. Business diversification enables the company in reducing its risks by allocating investments in various financial instruments, industries and other categories. The company is focused on enhancing its businesses and services, accruing earnings before interest, tax, depreciation and amortization (EBITDA) of KRW 7.5 trillion and achieving a debt/EBITDA ratio of 3.1x by 2017.

Key Picks

Some other well-ranked stocks within the industry are listed below:

AK Steel Holding Corporation has a whopping average earnings surprise of 170.80% for the last four quarters and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BASF SE (BASFY - Free Report) currently flaunts a Zacks Rank #1 and has an average earnings surprise of 34.34% for the trailing four quarters.

Albemarle Corporation (ALB - Free Report) currently carries a Zacks Rank #2 and has an average earnings surprise of 27.13% for the last four quarters.

Zacks' Top 10 Stocks for 2017

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POSCO (PKX) - free report >>

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Albemarle Corporation (ALB) - free report >>

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