Major Metals are Looking Cheap

US Steel (X) is looking attractive at $22. The steelmaker is expected to earn $5.40 per share in 2010 which means the stock is trading at 4 times next years earnings. The industry average for steel companies is 7.5 which would value US Steel at $40.50.

Alcoa (AA) is interesting at $6 per share. Analysts expect .60 per share earnings for next year which would place a multiple of 10 on Alcoa. The scary thing about Alcoa is that the company may have negative earnings if aluminum prices stay cheap.

AK Steel (AKS) looks like at a takeover target at its current price. The company has a decent balance sheet and currently trades at $6.68. 2010 earnings are expected to come in around $1.70. It might be worth buying in the mid 5’s.

Comments

[atavist.avatar:]

Or none of this might happen!

Feb 25 09:05 AM

[Poor me:]

X, AKS, RIO, GNA, GGB, all good strong companies at bargin prices. BUY, BUY, BUY.

Feb 25 10:03 AM

[henarl:]

Lots of stocks are cheap looking back but looking forward is not so clear.

Feb 25 10:48 AM

[KJP712:]

Have AK Steel already. US Steel and Alcoa are both on the watchlist.Agree with your price assessment and looking for a good entry point.

Feb 25 01:07 PM

[Green Eyes:]

I buy a lot of steel, aluminum and glass in my industry.... and the prices have come down tremendously... but who knows to what avail. How many businesses are going to be able to remain open and continue buying the steel? My company has been open 25 years and never has had to layoff until this year. Now we have laid off about 50% of our force -- thus buying 45% less material that we previously have.

I think it would be wise to wait at least 6 months to purchase these stocks because I don't think the downward slope has stopped. But these are definetly GREAT stocks to get into. They are a staple of the manufacturing industry.

Feb 25 01:23 PM

[Conan the B...:]

Aluminum will have to wait until the Auto industry improves.

I do not remember what amount is used in every car but do remember that it was in the hundreds of pounds.

Maybe someone else is in that business might be able to say.

Worldwide current overcapacity combined with demand destruction will not turn the Aluminum world around on a dime.

China is buying copper, copper inventories are Up 10% even with their interest. China is no longer adding in bulk, they are not interested in driving prices up.

India will start buying soon, probably after China is done.

You have heard of the Asean Zone, the $120 Billion being provided to Asian countries within their alliance. Of course, you have. They are cooperating with each other now. They had their Inflationary scares and subsequent slowdowns. They learn.

Feb 25 01:59 PM

[TinyTim:]

Aluminum is the main metal used in electrical transmission and distribution. Last I looked, Alcoa had a wire & cable division to move this metal. Alternative energy is usually remoted located and requires transmission lines to bring to grid.

Feb 25 03:19 PM

[User 350779:]

Why would you want to put two steel stocks in your portfolio?

On Feb 25 01:07 PM KJP712 wrote:

> Have AK Steel already. US Steel and Alcoa are both on the watchlist.Agree
> with your price assessment and looking for a good entry point.

Feb 25 05:21 PM

[Conan the B...:]

Buying two steel stocks can be the wise thing to do.

Different Steel Companies do not always manufacture the same products nor do they all have international exposure.

Production, Internal/External, plants here/there.

Steel stocks are not all things to all industries. Those which catered to the Auto Industry may hurt much longer than others.

IMO

Feb 26 07:10 AM

[PeteK:]

Stop dreaming, AKS won't be in the mid-5's from now on.
Expect AKS to reach at least $8.00 soon.

Feb 27 02:17 AM

[Mark Riddix:]

AKS hit $5.85 today.


On Feb 27 02:17 AM PeteK wrote:

> Stop dreaming, AKS won't be in the mid-5's from now on.
> Expect AKS to reach at least $8.00 soon.

Feb 27 02:09 PM

[PeteK:]

Mark, ;
For a few seconds it hit that price maybe but it's the closed price that counts.
With the Stimulus Package kicking in for American companies, and AKS is headquartered in OHIO, and think OHIO is a must win for any political Parties, AKS has the attention from the President and the Dems.
Just wait & see,
Just OHIO alone means something for the company.
Same as Michigan alone that the President has to save GM etc.
Next term if they lose Michigan & OHIO, it's finished for him. Got it ?

Feb 28 01:25 PM

[Hagi:]

Well...Cheap is a relative thing. I'm no economic specialist, But some things as the economy around the world markets needs to be taken into account when considering stock value. Even if you have a worthy product which it's price is low, If there isn't demand/buyers for it, you might fins yourself in deep do-do. Although I bought some X at 21.5 and 18, I think that patience is the key.....

Mar 03 10:30 AM

[matt g:]

I have already bought X and am planning on adding quit a bit more. I am taking a long term view on the market now and am not planning on any short moves.

Will X go back up to $196 any time soon, I doubt it. Will it go up to $40 with in the next couple of year, I think so. Here is to putting my money where my mouth is

Mar 07 08:52 PM

[matt g:]

I am taking the same view. adding a little each pay period (have a 100 free trades a year)


On Mar 03 10:30 AM Hagi wrote:

> Well...Cheap is a relative thing. I'm no economic specialist, But
> some things as the economy around the world markets needs to be taken
> into account when considering stock value. Even if you have a worthy
> product which it's price is low, If there isn't demand/buyers for
> it, you might fins yourself in deep do-do. Although I bought some
> X at 21.5 and 18, I think that patience is the key.....

Mar 07 10:24 PM

[PeteK:]

matt g,
You make sense.
Agree with you 100%.
I add AKS at the same time.

Mar 08 03:44 PM