Back to top

Analyst Blog

We currently maintain an Outperform recommendation on POSCO (PKX - Analyst Report), one of the leading Korean steel producers. The recommendation is based on the company’s long-term growth prospects. The $25.5 billion company is the world’s third largest steelmaker on the basis of output.

Why Outperform?

Since its inception in 1968, POSCO has been producing the best quality steel and steel products through 143 companies out of its total 202 companies operating across the world.

In 2012, crude steel production was at its highest level at 37.986 million tons and represented a 1.8% increase over 2011. Finished product sales were up 1.6%; export ratio of finished product sales was at 41.7% versus 38.6% in 2011.

The company’s product portfolio has a high proportion of value-added products, like cold-rolled steel, automotive steel plates and electric steel sheets, which work well in its favour. Its expansionary efforts in the domestic market as well as in the international arena, especially the fast growing and emerging markets worldwide, are quite remarkable.

Going forward, POSCO aims to expand its capacity to 450 Kt/year in China, 300 Kt/year in India, and 200 Kt/year in Turkey. Moreover, the company is planning to produce synthetic natural gas (SNG), an effective replacement for Liquid Natural Gas (LNG). The company invested roughly KRW 7.2 trillion in 2012 and plans investing KRW 7-8 trillion in 2013 to expand its capacity in steel production, gain self-sufficiency in raw material, and further its expansion plan of energy and material businesses.

Also, the company emphasizes cost savings and achieved KRW 1.3 trillion in saving in 2012 through adjustment in raw material blending ration in iron/coke making process, use of low-cost by-products and substitute materials.

Other Stocks to Consider

Other stocks to watch out for are Companhia Siderurgica Nacional (SID - Analyst Report), Gibraltar Industries, Inc. (ROCK - Analyst Report) and Commercial Metals Company (CMC - Snapshot Report), each with a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
BANCO DO BR… BDORY 16.78 +8.05%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%