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The last time AK Steel (NYSE:AKS) was priced at its current level was exactly eight years ago in June of 2004. Unfortunately for current investors, that was the last time the steel company faced a valuation under $5 per share. At the time the company was mired in an ugly slump of earnings losses including an EPS reading of $-0.15 in the first quarter of that year. Later in 2004, the company's balance sheet would find its way back to the plus side alongside shares. Overall, leaving shares to more than triple in price by January of 2005.

The future may not be as bright for shares this time around, but past history still makes the current price an attractive entry point. The company is expected to post positive, albeit mediocre, earnings reports the rest of this year and earnings growth is expected to accelerate by 266% next year.

Even if earnings disappoint, at least the proverbial dead cat bounce should provide some sparkle to the share price in the coming weeks. Since the company's last positive earnings report in July of 2011, shares have retracted more than 70%. They've lost more than 17% this month alone.

Now for any looking to take a chance with this stock, do recognize the reason behind the most recent fall. With questions arising as to worldwide growth and demand, steel stocks and their shares have been shattered across the board. U.S. Steel (NYSE:X), after losing 40% of its share value since April, has also reached new 52-week lows and lows not seen since early 2009. Even Nucor (NYSE:NUE), one of the safer steel investments, has shed 20% over the same time frame.

As for AK Steel, the company also endured two ratings cuts on Monday. One by Goldman Sachs who placed a sell rating on the stock and one by Dahlman Rose who rated the company a hold from a buy.

Still, the company's low valuation has arguably already priced in the risk the industry as a whole faces throughout the rest of this year. When also considering that with the exception of 2003, shares have never been lower than $4.35, the upside potential at least in the short term appears solid.

Also don't be surprised for shares to have a rapid resurrection as they are currently battling to stay north of $5. A point which becomes a major battleground level as shareholders fight to keep shares from falling below a price in which margin privileges are typically stripped.

If interested in purchasing shares for either the long or short term, stop loss orders at $4.50 would be appropriate. It would also be wise to take profits at or around $5.80 as support at $6 has been broken and that level may prove to be major resistance especially in the midst of potential market weakness.

Source: AK Steel Primed For A Short-Term Bounce