It's Time to Buy the Steel - Analyst
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Price: $54.84 --0%
Rating Summary:
9 Buy, 17 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
Rating Summary:
9 Buy, 17 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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United States Steel Corp. (NYSE: X) is trading higher today, but according to one analyst the upswing may have just started for the company and its peers.
JPMorgan's Michael Gambardella thinks steel and steel company stock prices will likely move higher in the short-term, both for fundamental and psychological reasons.
Fundamentally, Gambardella notes that scrap supply tends to tighten in the winter months and push both steel and stock prices higher. Psychologically, as year-end nears, "investors tend to mentally write off the stocks' previous twelve month performance and establish ranges for what companies could earn in a more normalized environment and where stocks would trade on those earnings,” he said.
Given the cyclical nature of the steel industry, just a modest improvement in sentiment could move perceptions of potential earnings for 2012 sharply higher. That said, Gambardella doesn't see a stained move higher until the nonresidential construction market stages some form of a recovery.
Shares of United States Steel are up 2.7 percent, Nucor (NYSE: NUE) is up 0.5 percent, and AK Steel (NYSE: AKS) is up fractionally.
JPMorgan's Michael Gambardella thinks steel and steel company stock prices will likely move higher in the short-term, both for fundamental and psychological reasons.
Fundamentally, Gambardella notes that scrap supply tends to tighten in the winter months and push both steel and stock prices higher. Psychologically, as year-end nears, "investors tend to mentally write off the stocks' previous twelve month performance and establish ranges for what companies could earn in a more normalized environment and where stocks would trade on those earnings,” he said.
Given the cyclical nature of the steel industry, just a modest improvement in sentiment could move perceptions of potential earnings for 2012 sharply higher. That said, Gambardella doesn't see a stained move higher until the nonresidential construction market stages some form of a recovery.
Shares of United States Steel are up 2.7 percent, Nucor (NYSE: NUE) is up 0.5 percent, and AK Steel (NYSE: AKS) is up fractionally.
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