Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Universal Stainless & Alloy Products May Be Bottoming, But The Future Remains Murky

When I last wrote about Universal Stainless & Alloy Products (NASDAQ:USAP), I thought this struggling specialty alloys company had some speculative appeal but only for aggressive risk-seeking investors. The shares have since risen about 30%, on par with fellow alloys company Carpenter (NYSE:CRS), better than Haynes (NASDAQ:HAYN) (up 15%), and worse than Allegheny Technologies (NYSE:ATI) (up 56%). I believe these gains have been fueled by optimism that the "perfect storm" of weakness in aerospace, power gen, oil/gas, and heavy equipment has largely bottomed and that sales and margins should improve from here.

I think USAP could be 10% to 20% undervalued today, and that's assuming the company doesn't regain prior peak sales

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