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Here's Why You Should Add Reliance Steel (RS) to Your Portfolio
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Reliance Steel & Aluminum Co. (RS - Free Report) is benefiting from demand strength across key end-use markets, diverse product mix, and strategic acquisitions. Shares of the company have shot up 20% over the past three months.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks poised to carry the momentum ahead.
Reliance Steel currently carries a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make this metals service center company an attractive choice for investors right now.
Price Performance
Shares of Reliance Steel have rallied 44% over the past six months against the 31.5% growth of its industry. It has also outperformed the S&P 500’s 19.3% rise over the same period.
Estimates Going Up
Over the past three months, the Zacks Consensus Estimate for Reliance Steel for 2021 has increased around 16.8%. The favorable estimate revisions instill investor confidence in the stock.
Healthy Growth Prospects
The Zacks Consensus Estimate for earnings for 2021 for Reliance Steel is currently pegged at $8.49, reflecting an expected year-over-year growth of 10.01%. The company also has an expected long-term earnings per share growth rate of 9%.
Positive Earnings Surprise History
Reliance Steel has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 80.4%, on average.
Upbeat Prospects
Reliance Steel is seeing higher demand in major end-use markets. The company saw higher shipments on a sequential comparison basis in the third quarter of 2020, owing to improved demand in many of its end markets as the economy gradually reopened following customer shutdowns and project delays related to the pandemic.
Demand in non-residential construction, the company’s biggest market, slowly increased in the third quarter on healthy bidding activity for new projects and the restart of projects that were earlier put on hold. Moreover, the company witnessed a significant rebound in demand for the toll processing services that it provides to the automotive market as automotive original equipment manufacturers and steel and aluminum mills ramped up production following shutdowns in the second quarter. The company sees improved demand in the fourth quarter.
Reliance Steel also continues with its aggressive acquisition strategy. Notably, the acquisition of All Metals Holding complements its growth strategy and meets its requirements of buying high-quality businesses, which are immediately accretive to its earnings. All Metals bolsters Reliance Steel’s toll processing and logistics services businesses.
The acquisition of Fry Steel Company is also in sync with Reliance Steel’s business model and strategy of investing in high quality and high margin businesses. This move also supports the company’s customer base and product diversification strategy.
Other top-ranked stocks worth considering in the industrial products space include AGCO Corporation (AGCO - Free Report) , Deere & Company (DE - Free Report) and Crown Holdings, Inc. (CCK - Free Report) .
AGCO has a projected earnings growth rate of 20.5% for the current year. The company’s shares have surged around 54% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere has an expected earnings growth rate of 48.5% for the current fiscal. The company’s shares have rallied around 74% in the past year. It currently carries a Zacks Rank #1.
Crown Holdings has a projected earnings growth rate of 11.5% for the current year. The company’s shares have gained around 38% in a year. It currently carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Here's Why You Should Add Reliance Steel (RS) to Your Portfolio
Reliance Steel & Aluminum Co. (RS - Free Report) is benefiting from demand strength across key end-use markets, diverse product mix, and strategic acquisitions. Shares of the company have shot up 20% over the past three months.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks poised to carry the momentum ahead.
Reliance Steel currently carries a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make this metals service center company an attractive choice for investors right now.
Price Performance
Shares of Reliance Steel have rallied 44% over the past six months against the 31.5% growth of its industry. It has also outperformed the S&P 500’s 19.3% rise over the same period.
Estimates Going Up
Over the past three months, the Zacks Consensus Estimate for Reliance Steel for 2021 has increased around 16.8%. The favorable estimate revisions instill investor confidence in the stock.
Healthy Growth Prospects
The Zacks Consensus Estimate for earnings for 2021 for Reliance Steel is currently pegged at $8.49, reflecting an expected year-over-year growth of 10.01%. The company also has an expected long-term earnings per share growth rate of 9%.
Positive Earnings Surprise History
Reliance Steel has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 80.4%, on average.
Upbeat Prospects
Reliance Steel is seeing higher demand in major end-use markets. The company saw higher shipments on a sequential comparison basis in the third quarter of 2020, owing to improved demand in many of its end markets as the economy gradually reopened following customer shutdowns and project delays related to the pandemic.
Demand in non-residential construction, the company’s biggest market, slowly increased in the third quarter on healthy bidding activity for new projects and the restart of projects that were earlier put on hold. Moreover, the company witnessed a significant rebound in demand for the toll processing services that it provides to the automotive market as automotive original equipment manufacturers and steel and aluminum mills ramped up production following shutdowns in the second quarter. The company sees improved demand in the fourth quarter.
Reliance Steel also continues with its aggressive acquisition strategy. Notably, the acquisition of All Metals Holding complements its growth strategy and meets its requirements of buying high-quality businesses, which are immediately accretive to its earnings. All Metals bolsters Reliance Steel’s toll processing and logistics services businesses.
The acquisition of Fry Steel Company is also in sync with Reliance Steel’s business model and strategy of investing in high quality and high margin businesses. This move also supports the company’s customer base and product diversification strategy.
Reliance Steel & Aluminum Co. Price and Consensus
Reliance Steel & Aluminum Co. price-consensus-chart | Reliance Steel & Aluminum Co. Quote
Stocks to Consider
Other top-ranked stocks worth considering in the industrial products space include AGCO Corporation (AGCO - Free Report) , Deere & Company (DE - Free Report) and Crown Holdings, Inc. (CCK - Free Report) .
AGCO has a projected earnings growth rate of 20.5% for the current year. The company’s shares have surged around 54% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere has an expected earnings growth rate of 48.5% for the current fiscal. The company’s shares have rallied around 74% in the past year. It currently carries a Zacks Rank #1.
Crown Holdings has a projected earnings growth rate of 11.5% for the current year. The company’s shares have gained around 38% in a year. It currently carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>