With all due respect, I'm arguing that the company is raising prices to mask the lower revenue they are facing as a result of lower commodity prices as a whole. What this sector and, especially AKS in particular, are doing is like what a bank does when a high number of their customers default. That is charge astronomical and unreasonable fees to the paying customers in order to still tread water. Unfortunately, whereas the bank customer has to accept the fee or experience a catastrophic hit on their credit, AK Steel and other steel companies that go along will just lose even more customers. That was why I included the steel trader's quote above because he mentions what I believe and that is those that can afford to not accept the increase will not. After all, it's not like demand is high right now. You mentioned yourself that the increase helped the company's earnings despite the volume drop. But how long can that last? The key is the volume drop. Volume has to rise and if demand remains weak and price increases continue, then where will this company end up? I just don't see enough economic growth to indicate steel demand will surge in the next few years and to think this stock will rise even without such demand is very risky. I do wish you luck in your position, but would encourage a stop loss at the 52-week low of $2.76 or at least within that range.
Fast Food Chains Left With Multiple Hurdles [View article]
Because these chains are taking business from both fast food and casual restaurants. In the case of fast food chains, companies like Chipotle provide far better service and quality food for not that much more ($8-$15 a plate). They also provide far quicker service than casual chains where you can plan on spending probably at least an hour sitting. These shares are currently enjoying their fair share of hype as they are continuing to grow quickly so the $328 price is probably overdone as the P/E ratio appears to indicate. However, if you really want to invest in this sector, stocks like Chipotle are your strongest bet and as long as that continues the share prices will hold.
Senate Budget Shows Worst May Be Yet To Come [View article]
Why do people constantly make references to the expenditures associated with the Iraq war? If you really feel that was a mistake, obviously you do, then you should be upfront pushing Congress to make drastic cuts throughout all facets.
Senate Budget Shows Worst May Be Yet To Come [View article]
Commodity prices are low? I think most looking at oil prices would have to disagree. Even gold, although off highs, is well above where it should be due to our near worthless, debt-ridden dollar. Also, whatever money you may save via your low rates, you will give back via inflation. You can't have low rates for extended periods of time.
Senate Budget Shows Worst May Be Yet To Come [View article]
What translates into a $5.2 trillion debt is that there are no cuts whatsoever to go along with that $100 billion in infrastructure spending. We're merely being allowed to continue on the path we are on now which is full of red ink. This isn't about liberals or conservatives, this is about making some concerted effort to balance a budget and this Senate measure does not accomplish such a task. Also, before you bash wars, remember that World War 2 was what eventually pushed our nation free from the Great Depression. The only difference was then we weren't also left to battle through indebted government programs such as Medicare and Medicaid.
Don't Flock To Retailers This Holiday Season [View article]
Well, WMT, TGT and M are all getting thrashed today in trade and others such as JCP, SHLD and BBY are barely positive. I'm surely not seeing a whole lot of winners here considering the market is still up 100 points in the last two sessions even after morning weakness. Also, you have to realize I wasn't just predicting Black Friday to be a flop. I was pointing out how many of these retailers went down last December. It used to be retailers were the best investment in December and the last couple years have shown that's no longer the case.
Don't Expect A Short-Term Pop In AK Steel [View article]
That's a tough call based on how much you have already lost. However, I would lean more towards taking the loss. The forecast was atrocious and shares are down another 7% today. That means they now also lack a defined support level. If this was the result of sector wide selling I might feel differently. However, even today Nucor and Steel Dynamics are relatively flat. So the selling is remaining concentrated towards AKS which is also troubling.
Don't Expect The Health Care Law To Be Repealed [View article]
It's true that we don't know what the rise would have been without the law. However, my personal health care costs have risen faster than they did before the bill was passed and I'm sure I'm not the only one.
STLD does have an attractive entry point at this time being near the low end of its range and also has more in the way of steady earnings than most other in the sector. It just depends on your risk tolerance. This company would not provide the risk of U.S. Steel, but it also wouldn't provide the potential returns either as the highest level this stock could probably reach given its recent history would be $20 with $15 being a more conservative estimate. If you are in or are considering taking up a position in STLD a stop loss order at $10 would be critical.
My faith in this stock comes mostly from its holding of support, especially in the face of multiple downgrades recently. This is the fifth time in the last 12 months shares have been under $20. The previous four times shares touched no lower than $17.67 and quickly rebounded back over $20. This is a very proven and solid support that would only be broken by a very negative company report. Although possible, I feel such a report is unlikely for two reasons. First, the company has beat on its first two quarterly reports this year and is not projected to post any further losses over the next six quarters. Although bottomline estimates have the company reporting losses the next two quarters, I feel such negativity has already been taken into consideration via the recent downward pressure on shares. Second, U.S. Steel, unlike Nucor, pays a very modest dividend with a yield of only 1%. That makes them more able to maintain strong cash flow which is undoubtedly necessary in such a sketchy environment. One reason why Nucor recently lowered guidance while U.S. Steel has not. I do want to still assure you this is a very risky position. I just look at the chart pattern and see a risk worth taking unlike, for instance, AK Steel. I definitely recommend a stop loss order on any trade here of at least $16. If you really worry about the risk, you may raise that to $18 as I feel that level should provide strong support as well.
I like the price you got in STLD and as long as you're willing to stay long you should be alright there. The AKS calls are a little riskier because the company's bottom line and future is rockier, but the entry price is still decent. You should be fine, but you will definitely need to be patient and realize the next few months may be difficult.
I am honestly not short either of these stocks nor do I ever short stocks in general. I just realize these stocks are hovering over levels that may prove final support and economic conditions are simply not favorable for this sector. As for X, they have missed on 6 of the past 8 earnings reports so you're taking a tremendous risk assuming earnings are going to be that great. I was favorable towards these stocks over the past few weeks (read prior articles) because I believed short term bounces would occur. That happened. If you followed that advice, I'm just saying now would be the time to cash in. If you're long, I do believe you will make money eventually. However, you should be prepared to lose money over the next few months, at least.
AK Steel Still Not A Good Buy [View article]
AK Steel Still Not A Good Buy [View article]
Unfortunately, whereas the bank customer has to accept the fee or experience a catastrophic hit on their credit, AK Steel and other steel companies that go along will just lose even more customers. That was why I included the steel trader's quote above because he mentions what I believe and that is those that can afford to not accept the increase will not. After all, it's not like demand is high right now.
You mentioned yourself that the increase helped the company's earnings despite the volume drop. But how long can that last? The key is the volume drop. Volume has to rise and if demand remains weak and price increases continue, then where will this company end up? I just don't see enough economic growth to indicate steel demand will surge in the next few years and to think this stock will rise even without such demand is very risky.
I do wish you luck in your position, but would encourage a stop loss at the 52-week low of $2.76 or at least within that range.
Fast Food Chains Left With Multiple Hurdles [View article]
These shares are currently enjoying their fair share of hype as they are continuing to grow quickly so the $328 price is probably overdone as the P/E ratio appears to indicate. However, if you really want to invest in this sector, stocks like Chipotle are your strongest bet and as long as that continues the share prices will hold.
Senate Budget Shows Worst May Be Yet To Come [View article]
Senate Budget Shows Worst May Be Yet To Come [View article]
Also, whatever money you may save via your low rates, you will give back via inflation. You can't have low rates for extended periods of time.
Senate Budget Shows Worst May Be Yet To Come [View article]
Also, before you bash wars, remember that World War 2 was what eventually pushed our nation free from the Great Depression. The only difference was then we weren't also left to battle through indebted government programs such as Medicare and Medicaid.
Don't Flock To Retailers This Holiday Season [View article]
Don't Flock To Retailers This Holiday Season [View article]
Also, you have to realize I wasn't just predicting Black Friday to be a flop. I was pointing out how many of these retailers went down last December. It used to be retailers were the best investment in December and the last couple years have shown that's no longer the case.
Don't Expect A Short-Term Pop In AK Steel [View article]
If this was the result of sector wide selling I might feel differently. However, even today Nucor and Steel Dynamics are relatively flat. So the selling is remaining concentrated towards AKS which is also troubling.
Don't Expect The Health Care Law To Be Repealed [View article]
http://bit.ly/Ud0z96
What's to say they would suddenly reverse course and stop now?
Don't Expect The Health Care Law To Be Repealed [View article]
U.S. Steel Again Worth The Risk [View article]
If you are in or are considering taking up a position in STLD a stop loss order at $10 would be critical.
U.S. Steel Again Worth The Risk [View article]
First, the company has beat on its first two quarterly reports this year and is not projected to post any further losses over the next six quarters. Although bottomline estimates have the company reporting losses the next two quarters, I feel such negativity has already been taken into consideration via the recent downward pressure on shares.
Second, U.S. Steel, unlike Nucor, pays a very modest dividend with a yield of only 1%. That makes them more able to maintain strong cash flow which is undoubtedly necessary in such a sketchy environment. One reason why Nucor recently lowered guidance while U.S. Steel has not.
I do want to still assure you this is a very risky position. I just look at the chart pattern and see a risk worth taking unlike, for instance, AK Steel. I definitely recommend a stop loss order on any trade here of at least $16. If you really worry about the risk, you may raise that to $18 as I feel that level should provide strong support as well.
Time To Run From Steel [View article]
Time To Run From Steel [View article]
I was favorable towards these stocks over the past few weeks (read prior articles) because I believed short term bounces would occur. That happened. If you followed that advice, I'm just saying now would be the time to cash in. If you're long, I do believe you will make money eventually. However, you should be prepared to lose money over the next few months, at least.