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Nucor (NUE) Rallies 70% in 3 Months: What's Driving the Stock?
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Nucor Corporation’s (NUE - Free Report) shares have surged 70.2% over the past three months. The company has also outperformed its industry’s rise of 35.2% over the same time frame. Moreover, it has topped the S&P 500’s 10.2% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
Image Source: Zacks Investment Research
What’s Aiding NUE?
Nucor delivered higher profits in the first quarter of 2021, thanks to strong demand and higher steel prices. Notably, first-quarter marked the most profitable quarter in the steel giant’s history.
The company is benefiting from strength in the non-residential construction market and a strong recovery in the automotive market. Strong customer demand has led to a rebound in the automotive market. The company is also seeing improved conditions in heavy equipment, agriculture and renewable energy markets. Higher demand is supporting its shipments.
Moreover, Nucor is benefiting from an upswing in steel prices. Higher average selling prices boosted its revenues and bottom line in the first quarter. Its average sales price climbed 25% year over year in the quarter.
Notably, U.S. steel prices have staged a strong recovery and hit record levels after plunging to pandemic-led multi-year lows in August 2020. The rebound has been driven by rising demand (especially in automotive and construction), tight supply conditions and higher raw material costs.
The benchmark hot-rolled coil (HRC) prices started to recover in September 2020 on U.S. steel mills’ back-to-back price hike actions, supply constraints and an uptick in end-market demand. Prices are shooting higher since then and surged to levels not seen in more than a decade. As such, higher domestic steel prices should act as a catalyst for Nucor’s steel mills unit.
Nucor, in its first-quarter call, said that it expects second-quarter earnings to be the highest quarterly earnings in its history, exceeding the record-level set in the first quarter. Earnings are expected to be mainly driven by higher pricing and margins in the steel mills segment.
The company also remains committed to boost production capacity, which should drive profitable growth and strengthen its position as a low-cost producer. It is making progress with its growth projects and has already commissioned some of its projects. Nucor should gain from considerable market opportunities from its strategic investments in its most significant growth projects including the Brandenburg plate mill and modernization and expansion of the Gallatin sheet mill.
Earnings estimates for Nucor have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 43.6% while the same for second-quarter 2021 has gone up 86%. The favorable estimate revisions instill investor confidence in the stock.
Other top-ranked stocks worth considering in the basic materials space include Dow Inc. (DOW - Free Report) , Cabot Corporation (CBT - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .
Dow has a projected earnings growth rate of roughly 268.7% for the current year. The company’s shares have surged 61% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have shot up 56% in the past year. It currently carries a Zacks Rank #2 (Buy).
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 139% in the past year. It currently carries a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Nucor (NUE) Rallies 70% in 3 Months: What's Driving the Stock?
Nucor Corporation’s (NUE - Free Report) shares have surged 70.2% over the past three months. The company has also outperformed its industry’s rise of 35.2% over the same time frame. Moreover, it has topped the S&P 500’s 10.2% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
What’s Aiding NUE?
Nucor delivered higher profits in the first quarter of 2021, thanks to strong demand and higher steel prices. Notably, first-quarter marked the most profitable quarter in the steel giant’s history.
The company is benefiting from strength in the non-residential construction market and a strong recovery in the automotive market. Strong customer demand has led to a rebound in the automotive market. The company is also seeing improved conditions in heavy equipment, agriculture and renewable energy markets. Higher demand is supporting its shipments.
Moreover, Nucor is benefiting from an upswing in steel prices. Higher average selling prices boosted its revenues and bottom line in the first quarter. Its average sales price climbed 25% year over year in the quarter.
Notably, U.S. steel prices have staged a strong recovery and hit record levels after plunging to pandemic-led multi-year lows in August 2020. The rebound has been driven by rising demand (especially in automotive and construction), tight supply conditions and higher raw material costs.
The benchmark hot-rolled coil (HRC) prices started to recover in September 2020 on U.S. steel mills’ back-to-back price hike actions, supply constraints and an uptick in end-market demand. Prices are shooting higher since then and surged to levels not seen in more than a decade. As such, higher domestic steel prices should act as a catalyst for Nucor’s steel mills unit.
Nucor, in its first-quarter call, said that it expects second-quarter earnings to be the highest quarterly earnings in its history, exceeding the record-level set in the first quarter. Earnings are expected to be mainly driven by higher pricing and margins in the steel mills segment.
The company also remains committed to boost production capacity, which should drive profitable growth and strengthen its position as a low-cost producer. It is making progress with its growth projects and has already commissioned some of its projects. Nucor should gain from considerable market opportunities from its strategic investments in its most significant growth projects including the Brandenburg plate mill and modernization and expansion of the Gallatin sheet mill.
Earnings estimates for Nucor have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 43.6% while the same for second-quarter 2021 has gone up 86%. The favorable estimate revisions instill investor confidence in the stock.
Nucor Corporation Price and Consensus
Nucor Corporation price-consensus-chart | Nucor Corporation Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Dow Inc. (DOW - Free Report) , Cabot Corporation (CBT - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .
Dow has a projected earnings growth rate of roughly 268.7% for the current year. The company’s shares have surged 61% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have shot up 56% in the past year. It currently carries a Zacks Rank #2 (Buy).
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 139% in the past year. It currently carries a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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