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Why Should You Add Reliance Steel (RS) to Your Portfolio?
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Reliance Steel & Aluminum Co. (RS - Free Report) has been benefiting from healthy demand across its major end-use markets, a diversified product base and strategic acquisitions.
We are optimistic about its prospects and believe that the time is right to add the stock to one's portfolio as it looks poised to carry the momentum ahead.
Reliance Steel carries a Zacks Rank #2 (Buy) and has 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 take a look into the factors that make Reliance Steel an attractive choice for investors right now.
An Outperformer
Shares of Reliance Steel have gained 36.3% in a year compared with the 13.2% rise of its industry. It has also outperformed the S&P 500’s roughly 24.2% rise over the same period.
Image Source: Zacks Investment Research
Superior Return on Equity (ROE)
Reliance Steel’s ROE of 18.9%, as compared with the industry average of 1.8%, manifests the company’s efficiency in utilizing shareholder’s funds.
Estimates on the Rise
Over the past two months, the Zacks Consensus Estimate for RS for 2024 has increased around 1.9%. Favorable estimate revisions instill investor confidence in the stock.
Strong Demand, Acquisitions Drive Reliance Steel
Reliance Steel is benefiting from strong underlying demand in its major markets. Demand in non-residential construction, the company’s biggest market, increased in the third quarter of 2023. Based on the current sentiment of customers and existing backlogs, the company maintains an optimistic outlook for the fourth quarter, anticipating that non-residential construction activities in the sectors it operates in will remain healthy, with consideration for the usual seasonal variations.
Commercial aerospace demand also remained strong in the third quarter. Reliance expects commercial aerospace demand to stay healthy in the fourth quarter as build rates grow from current levels. Moreover, demand in the company’s aerospace business's military, defense and space segments remains robust, with substantial backlogs.
Reliance Steel is also seeing higher year-over-year demand for toll processing services for the automobile market. The company’s niche position in providing toll processing services to the automotive market, particularly with the ongoing rise in aluminum usage, instills optimism for long-term demand in this sector.
Moreover, RS has been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. The acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals are in sync with its strategy of investing in high-quality businesses. The acquisition of Southern Steel Supply also expands the company’s reach in Southern United States and boosts its value-added processing services.
Some other top-ranked stocks worth a look in the basic materials space are Cameco Corporation (CCJ - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and Quaker Chemical Corporation (KWR - Free Report) .
Cameco has a projected earnings growth rate of 156% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised upward by 20.8% over the past 60 days. The stock is up around 87% in a year. CCJ currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the consensus estimate for Axalta Coating Systems’ current-year earnings has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #2, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 27% in the past year.
Quaker Chemical has a projected earnings growth rate of 28.3% for the current year. KWR has a trailing four-quarter earnings surprise of roughly 16.7%, on average. KWR shares have gained 25.4% in a year.
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Why Should You Add Reliance Steel (RS) to Your Portfolio?
Reliance Steel & Aluminum Co. (RS - Free Report) has been benefiting from healthy demand across its major end-use markets, a diversified product base and strategic acquisitions.
We are optimistic about its prospects and believe that the time is right to add the stock to one's portfolio as it looks poised to carry the momentum ahead.
Reliance Steel carries a Zacks Rank #2 (Buy) and has 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 take a look into the factors that make Reliance Steel an attractive choice for investors right now.
An Outperformer
Shares of Reliance Steel have gained 36.3% in a year compared with the 13.2% rise of its industry. It has also outperformed the S&P 500’s roughly 24.2% rise over the same period.
Image Source: Zacks Investment Research
Superior Return on Equity (ROE)
Reliance Steel’s ROE of 18.9%, as compared with the industry average of 1.8%, manifests the company’s efficiency in utilizing shareholder’s funds.
Estimates on the Rise
Over the past two months, the Zacks Consensus Estimate for RS for 2024 has increased around 1.9%. Favorable estimate revisions instill investor confidence in the stock.
Strong Demand, Acquisitions Drive Reliance Steel
Reliance Steel is benefiting from strong underlying demand in its major markets. Demand in non-residential construction, the company’s biggest market, increased in the third quarter of 2023. Based on the current sentiment of customers and existing backlogs, the company maintains an optimistic outlook for the fourth quarter, anticipating that non-residential construction activities in the sectors it operates in will remain healthy, with consideration for the usual seasonal variations.
Commercial aerospace demand also remained strong in the third quarter. Reliance expects commercial aerospace demand to stay healthy in the fourth quarter as build rates grow from current levels. Moreover, demand in the company’s aerospace business's military, defense and space segments remains robust, with substantial backlogs.
Reliance Steel is also seeing higher year-over-year demand for toll processing services for the automobile market. The company’s niche position in providing toll processing services to the automotive market, particularly with the ongoing rise in aluminum usage, instills optimism for long-term demand in this sector.
Moreover, RS has been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. The acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals are in sync with its strategy of investing in high-quality businesses. The acquisition of Southern Steel Supply also expands the company’s reach in Southern United States and boosts its value-added processing services.
Reliance Steel & Aluminum Co. Price and Consensus
Reliance Steel & Aluminum Co. price-consensus-chart | Reliance Steel & Aluminum Co. Quote
Other Stocks to Consider
Some other top-ranked stocks worth a look in the basic materials space are Cameco Corporation (CCJ - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and Quaker Chemical Corporation (KWR - Free Report) .
Cameco has a projected earnings growth rate of 156% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised upward by 20.8% over the past 60 days. The stock is up around 87% in a year. CCJ currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the consensus estimate for Axalta Coating Systems’ current-year earnings has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #2, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 27% in the past year.
Quaker Chemical has a projected earnings growth rate of 28.3% for the current year. KWR has a trailing four-quarter earnings surprise of roughly 16.7%, on average. KWR shares have gained 25.4% in a year.