With the economy doing well, basically, it’s a little surprising to see how poorly these steel stocks are performing. It’s a sector made up of companies in the construction of most buildings, homes, automobiles and many other products. If these equities — and the steel stocks index — represent a form of expectation, there might be a larger problem, economically speaking.
4 Steel Stocks New Lows
Dow Jones Steel Stock Index ($DJUSST)
This index provides investor with a good view of the sector as a whole. Right now, you can see how much it’s dropped from that early November level. Both the 50-day and the 200-day are moving downward. The index price in December slid below the September low.
Gerdau (NYSE: GGB)
The Brazilian-based steel maker last week dropped below the early August low. The red-circled area shows how far the price has gone down during December and into January. Both the 50-day and the 200-day moving averages are heading down.
Market capitalization for Gerdau is $3.91 billion. The stock trades with a price-earnings ratio of 7 and at a 40% discount to its book value. This year’s earnings are off by 38% and, over the past five years, up by 19%. The company pays a 5.46% dividend.
Metallus (NYSE: MTUS)
The price Friday slid to just below the October lows and then buyers brought it back to a .37% gain for the day. Note that the 50-day moving average crossed below the 200-day moving average in August, signaling weakness. Since then, it’s traded below the longer-term measure every day.
Market cap is $610 million. The stock is a component of the iShares Russell 2000 small caps exchange traded fund. Earnings this year are down by 67%. The price-earnings ratio is 22 and it trades at 85% of book value. Metallus does not pay a dividend.
Nucor (NYSE: NUE)
The 50-day moving average crossed below the 200-day moving average back in mid-June (tiny red circle). In mid-December the price took out what had been support at the September low. Last week’s new low below $115 found buyers before the session ended and it closed up .85%.
Nucor is an S&P 500 component with a market capitalization of $28.60 billion. This year’s earnings are down by 53% and up over the past five years by 19%. The stock trades at 1.39 book and with a price-earnings ratio of 11.67. Nucor pays a 1.79% dividend.
Companhia Vale do Rio Doce (NYSE: VALE)
In early December the stock took out the early August low, rallied briefly and then kept going down to the new low seen last week (red circled). It trades well below both the 50-day and the 200-day moving averages.
This one is another steel maker based in Brazil. Market cap is $37 billion. The price-earnings ratio is a mere 4. Shares Friday could have been purchased at a 3% discount from book value. Earnings this year are up by 10% and up over the past five years by 6.23%.
Stats courtesy of FinViz.com. Charts courtesy of Stockcharts.com.
More analysis and commentary at johnnavin.substack.com.
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