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Reliance Steel's (RS) Shares Up 28% in 6 Months: Here's Why
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Reliance Steel & Aluminum Co. (RS - Free Report) shares have gained 28% over the past six months. The company has outperformed its industry’s rise of 23.1% over the same time frame. It has also topped the S&P 500’s roughly 10.4% decline 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 Going in RS’s Favor?
Reliance Steel is benefiting from strong demand across key end-use markets, a diversified product base and strategic acquisitions. It remains optimistic about the business environment in 2022 and sees robust underlying demand in the majority of its end markets.
Demand in non-residential construction, the company’s biggest market, improved in the first quarter of 2022 after being affected by typical year-end seasonality in the fourth quarter. The company expects non-residential construction activities to strengthen through 2022, aided by strong booking trends.
Reliance Steel is also witnessing strength in semiconductors and continued recovery in the energy (oil and natural gas) market. Demand in the heavy industry for both agricultural and construction equipment also continued to improve in the first quarter.
The company is also seeing healthy demand for the toll processing services that it provides to the automotive market despite the impact of global microchip shortages on production levels. Additionally, demand in commercial aerospace is improving on higher activities.
The company has also been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. Its latest acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals are in sync with its strategy of investing in high-quality businesses.
Rotax Metals diversifies the company's products by widening its portfolio of specialty bronze, brass and copper products. Massachusetts-based Admiral Metals’ strong reputation in the metal industry with high levels of customer service and next-day delivery flexibility promises to further solidify Reliance Steel’s position.
Nu-Tech’s reputation in the key markets that it serves through its proprietary processes and quality certifications and its support for Reliance Steel’s customer, product and geographical diversification strategies make it a solid choice. RS anticipates the acquisition to aid its growth in the nuclear, aerospace and other industries.
Earnings estimates for Reliance Steel have also been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2022 has increased around 27.7%. The consensus estimate for the second quarter of 2022 has also been revised 24.6% upward over the same time frame.
Other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , Albemarle Corporation (ALB - Free Report) and Cabot Corporation (CBT - Free Report) .
Nutrien, sporting a Zacks Rank #1, has an expected earnings growth rate of 163.4% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 27.5% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 5.8%, on average. NTR has rallied 49% in a year.
Albemarle has a projected earnings growth rate of 203.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 105% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has rallied roughly 45% in a year. The company flaunts a Zacks Rank #1.
Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 21.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 5.2% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 20% over a year.
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Reliance Steel's (RS) Shares Up 28% in 6 Months: Here's Why
Reliance Steel & Aluminum Co. (RS - Free Report) shares have gained 28% over the past six months. The company has outperformed its industry’s rise of 23.1% over the same time frame. It has also topped the S&P 500’s roughly 10.4% decline 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 Going in RS’s Favor?
Reliance Steel is benefiting from strong demand across key end-use markets, a diversified product base and strategic acquisitions. It remains optimistic about the business environment in 2022 and sees robust underlying demand in the majority of its end markets.
Demand in non-residential construction, the company’s biggest market, improved in the first quarter of 2022 after being affected by typical year-end seasonality in the fourth quarter. The company expects non-residential construction activities to strengthen through 2022, aided by strong booking trends.
Reliance Steel is also witnessing strength in semiconductors and continued recovery in the energy (oil and natural gas) market. Demand in the heavy industry for both agricultural and construction equipment also continued to improve in the first quarter.
The company is also seeing healthy demand for the toll processing services that it provides to the automotive market despite the impact of global microchip shortages on production levels. Additionally, demand in commercial aerospace is improving on higher activities.
The company has also been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. Its latest acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals are in sync with its strategy of investing in high-quality businesses.
Rotax Metals diversifies the company's products by widening its portfolio of specialty bronze, brass and copper products. Massachusetts-based Admiral Metals’ strong reputation in the metal industry with high levels of customer service and next-day delivery flexibility promises to further solidify Reliance Steel’s position.
Nu-Tech’s reputation in the key markets that it serves through its proprietary processes and quality certifications and its support for Reliance Steel’s customer, product and geographical diversification strategies make it a solid choice. RS anticipates the acquisition to aid its growth in the nuclear, aerospace and other industries.
Earnings estimates for Reliance Steel have also been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2022 has increased around 27.7%. The consensus estimate for the second quarter of 2022 has also been revised 24.6% upward over the same time frame.
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 basic materials space include Nutrien Ltd. (NTR - Free Report) , Albemarle Corporation (ALB - Free Report) and Cabot Corporation (CBT - Free Report) .
Nutrien, sporting a Zacks Rank #1, has an expected earnings growth rate of 163.4% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 27.5% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 5.8%, on average. NTR has rallied 49% in a year.
Albemarle has a projected earnings growth rate of 203.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 105% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has rallied roughly 45% in a year. The company flaunts a Zacks Rank #1.
Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 21.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 5.2% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 20% over a year.