Steel Dynamics, Inc.'s (STLD - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this steel maker an intriguing investment option.
What Makes STLD an Attractive Pick?
Solid Rank & VGM Score: Steel Dynamics currently sports 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. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Steel Dynamics has outperformed the industry over a year. The company’s shares have rallied around 38.4% over this period, compared with roughly 13.8% growth recorded by the industry.
Solid Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Steel Dynamics is currently pegged at $5.55, reflecting an expected year-over-year growth of 109.4%. Moreover, earnings are expected to register a 154.5% growth in third-quarter 2018. The company also has an expected long-term earnings per share growth rate of 12%, higher than the industry average of 10.1%.
Superior Return on Equity (ROE): Steel Dynamics’ ROE of 26.9%, as compared with the industry average of 13.3%, manifests the company’s efficiency in utilizing shareholder’s funds.
Buoyant Q3 Outlook: Steel Dynamics, earlier this month, issued guidance for third-quarter 2018. The company expects earnings per share in the range of $1.60-$1.64, including estimated charges of $13 million or 4 cents related to the Heartland buyout. Excluding these charges, adjusted earnings for the quarter is projected in the range of $1.64-$1.68 a share.
Notably, the company’s projected figures are higher than earnings of $1.53 per share in second-quarter 2018 and 64 cents in the third quarter of 2017. The company expects profitability from steel operations to improve sequentially in the third quarter on the back of strong demand and significant metal spread expansion.
Moreover, the company expects average quarterly steel product pricing to increase more than the average scrap costs across the steel platform. This is likely to boost the profitability for sheet and long product steel operations. The company believes that market dynamics and steel consumption will remain strong, courtesy of customer optimism and strong steel demand fundamentals.
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include ArcelorMittal (MT - Free Report) , BHP Billiton Limited (BHP - Free Report) and Huntsman Corporation (HUN - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
ArcelorMittal has an expected long-term earnings growth rate of 4.8%. The company’s shares have gained around 29% in a year.
BHP Billiton has an expected long-term earnings growth rate of 5.3%. The company’s shares have gained around 23% in a year.
Huntsman has an expected long-term earnings growth rate of 8.5%. The company’s shares have gained around 7% in a year.
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