We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Zacks Analyst Blog Highlights Olympic Steel, Steel Dynamics, TimkenSteel, Aperam and Nucor
Read MoreHide Full Article
For Immediate Release
Chicago, IL – January 5, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Olympic Steel, Inc. (ZEUS - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) , TimkenSteel Corporation , Aperam S.A. (APEMY - Free Report) and Nucor Corporation (NUE - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Nailing the Bright Spot in a Turbulent 2023
Perhaps it would be wrong to say the bright spot. That would mean that it is the only one. And the Steel - Producers industry certainly isn’t the only one. All said and done, investors appear to be horribly pessimistic about the markets in general, which is a sure sign that there are plenty of cheap stocks to choose from.
But the steel producers are a bit of an exception. Because they really have so much going for them this year. So much, in fact, that it’s even easy to ignore the uncertainties that a slower economy, deteriorating consumer spending and rising interest rates could bestow upon our markets. Even if the Fed gets to a 5.5% end-goal (more than what the market’s expecting now) and then sticks with that for a while, the negatives still couldn’t stand up to the positives we are seeing in this space.
The first of these would be pent-up demand in the auto market, which is one of the primary consumers of the commodity. Steelmakers have been talking about it for a while now. Because of supply chain issues and the non-availability of semiconductors, demand from this market has been building up. Depending on which company you’re looking up, they are talking about a swelling order book at good pricing extending into the second half of the year. And now that the other issues have cleared up and there’s a huge drive to switch to EVs in the next few years, it’s safe to say that there’s several years of growth in the cards.
The second factor is government regulations and initiatives, such as the CHIPS Act and the Infrastructure Investment and Jobs Act, both of which are intended to onshore some strategically important manufacturing and increase government spending on public infrastructure. This will, of course, increase demand for steel. While this is a tailwind for several years, market watchers expect some of the spending to start kicking in this year.
The energy crisis is nothing new. Ever since Russia went to war against Ukraine, the global energy markets have gone into a tailspin. The markets were already under pressure catering to pent up demand after the pandemic. With the West’s sanctions on Russia, one of the major energy players is set to move out of the market (effectively). Europe intends to stop using Russian energy at the earliest, but this requires the shifting of supply chains and therefore, significant investment in energy markets.
It’s clear as day that clean energy won’t be up to speed with global demand in the next few years. Therefore, although backstopped by environmentalists and investors alike, energy companies are stepping up to add capacity. Which is so good for steelmakers.
With that as a backdrop, one would expect this group to be trading at rich valuations. But that is not the case as we see below-
Olympic Steel, Inc.
Olympus processes, distributes and stores metal products (both steel and aluminum).
It trades at 4.4X earnings, which is a discount of 74.5% to the S&P 500 and 53.6% to its own median value over the past year.
The Zacks Rank #1 stock has a Value Score of A and Growth Score of C.
Steel Dynamics, Inc.
Steel Dynamics is a steel producer and metal recycler in the United States.
It trades at 4.5X earnings, a 74.1% discount to the S&P 500 and a 24.4% discount to its own median value over the past year.
The Zacks Rank #1 stock has a B for both value and growth.
TimkenSteel Corporation
This maker of carbon, micro-alloy and alloy steel ingots, bars, tubes and billets, as well as machining and thermal treatment services is trading at 8.4X earnings, which is a 51% discount to the S&P 500 and a 37.5% discount to its own high point over the past year.
The Zacks Rank #1 stock has a Value Score of A and Growth Score of D.
Aperam S.A.
This maker of stainless and specialty steel products is trading at 3.5X earnings, which is a 79.6% discount to the S&P 500 and a 10% discount to its own median level over the past year.
The Zacks Rank #1 (Strong Buy) stock has scored an A for both value and growth (according to our style score system), indicating that it is attractive for investors seeking either value or growth this year.
Nucor Corporation
Nucor produces hot-rolled, cold-rolled, and galvanized sheet steel products; plate steel products; wide-flange beams, beam blanks, and H-piling and sheet piling products; and bar steel products, such as blooms, billets, concrete reinforcing and merchant bars, and special bar quality products.
At 4.7X earnings, Nucor trades at a discount of 72.7% to the S&P 500 and a 39.6% discount to its median level over the past year.
The Zacks Rank #1 stock has a B for both value and growth.
Conclusion
Valuations came down across the industry as analysts adjusted estimates in line with the expected softening of the economy this year. But share prices have been beaten down too far even as some of the above stocks are already seeing upward revisions over the last 30 days. The current valuations and existence of secular tailwinds make this an attractive segment to invest in right now.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
The Zacks Analyst Blog Highlights Olympic Steel, Steel Dynamics, TimkenSteel, Aperam and Nucor
For Immediate Release
Chicago, IL – January 5, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Olympic Steel, Inc. (ZEUS - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) , TimkenSteel Corporation , Aperam S.A. (APEMY - Free Report) and Nucor Corporation (NUE - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Nailing the Bright Spot in a Turbulent 2023
Perhaps it would be wrong to say the bright spot. That would mean that it is the only one. And the Steel - Producers industry certainly isn’t the only one. All said and done, investors appear to be horribly pessimistic about the markets in general, which is a sure sign that there are plenty of cheap stocks to choose from.
But the steel producers are a bit of an exception. Because they really have so much going for them this year. So much, in fact, that it’s even easy to ignore the uncertainties that a slower economy, deteriorating consumer spending and rising interest rates could bestow upon our markets. Even if the Fed gets to a 5.5% end-goal (more than what the market’s expecting now) and then sticks with that for a while, the negatives still couldn’t stand up to the positives we are seeing in this space.
The first of these would be pent-up demand in the auto market, which is one of the primary consumers of the commodity. Steelmakers have been talking about it for a while now. Because of supply chain issues and the non-availability of semiconductors, demand from this market has been building up. Depending on which company you’re looking up, they are talking about a swelling order book at good pricing extending into the second half of the year. And now that the other issues have cleared up and there’s a huge drive to switch to EVs in the next few years, it’s safe to say that there’s several years of growth in the cards.
The second factor is government regulations and initiatives, such as the CHIPS Act and the Infrastructure Investment and Jobs Act, both of which are intended to onshore some strategically important manufacturing and increase government spending on public infrastructure. This will, of course, increase demand for steel. While this is a tailwind for several years, market watchers expect some of the spending to start kicking in this year.
The energy crisis is nothing new. Ever since Russia went to war against Ukraine, the global energy markets have gone into a tailspin. The markets were already under pressure catering to pent up demand after the pandemic. With the West’s sanctions on Russia, one of the major energy players is set to move out of the market (effectively). Europe intends to stop using Russian energy at the earliest, but this requires the shifting of supply chains and therefore, significant investment in energy markets.
It’s clear as day that clean energy won’t be up to speed with global demand in the next few years. Therefore, although backstopped by environmentalists and investors alike, energy companies are stepping up to add capacity. Which is so good for steelmakers.
With that as a backdrop, one would expect this group to be trading at rich valuations. But that is not the case as we see below-
Olympic Steel, Inc.
Olympus processes, distributes and stores metal products (both steel and aluminum).
It trades at 4.4X earnings, which is a discount of 74.5% to the S&P 500 and 53.6% to its own median value over the past year.
The Zacks Rank #1 stock has a Value Score of A and Growth Score of C.
Steel Dynamics, Inc.
Steel Dynamics is a steel producer and metal recycler in the United States.
It trades at 4.5X earnings, a 74.1% discount to the S&P 500 and a 24.4% discount to its own median value over the past year.
The Zacks Rank #1 stock has a B for both value and growth.
TimkenSteel Corporation
This maker of carbon, micro-alloy and alloy steel ingots, bars, tubes and billets, as well as machining and thermal treatment services is trading at 8.4X earnings, which is a 51% discount to the S&P 500 and a 37.5% discount to its own high point over the past year.
The Zacks Rank #1 stock has a Value Score of A and Growth Score of D.
Aperam S.A.
This maker of stainless and specialty steel products is trading at 3.5X earnings, which is a 79.6% discount to the S&P 500 and a 10% discount to its own median level over the past year.
The Zacks Rank #1 (Strong Buy) stock has scored an A for both value and growth (according to our style score system), indicating that it is attractive for investors seeking either value or growth this year.
Nucor Corporation
Nucor produces hot-rolled, cold-rolled, and galvanized sheet steel products; plate steel products; wide-flange beams, beam blanks, and H-piling and sheet piling products; and bar steel products, such as blooms, billets, concrete reinforcing and merchant bars, and special bar quality products.
At 4.7X earnings, Nucor trades at a discount of 72.7% to the S&P 500 and a 39.6% discount to its median level over the past year.
The Zacks Rank #1 stock has a B for both value and growth.
Conclusion
Valuations came down across the industry as analysts adjusted estimates in line with the expected softening of the economy this year. But share prices have been beaten down too far even as some of the above stocks are already seeing upward revisions over the last 30 days. The current valuations and existence of secular tailwinds make this an attractive segment to invest in right now.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.