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Norman Tweed
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Retiree interested in stocks and financial instruments, especially dividend producing stocks. In the 20th century, I was an electrical engineer with Dominion Resources. I use a dividend growth investment style. Quick rules of thumb for complex questions, like fair value p/e using the Gordon... More
  • Buy NUE @ $36.25 2 comments
    Jul 31, 2011 3:20 PM

    Nucor Corp is a steel maker and recycler. Their segments are: Steel Mills, Steel Products, and Raw Materials. It is a basic materials sector stock, which is a highly cyclical sector. The price is averaging $40 per share since October 2008 and with any dips it can reach the 4% yield point of $36.25, based on current dividend of $1.45.

     

    EPS growth 2011-2012

    EPS 2010

    EPS 2011

    EPS 2012

    EPS 2013

    Price 7/29/2011

    4% yield

    40.30%

    $0.44

    $2.68

    $3.76

    $4.24

    $38.89

    $36.25

     

    NUE is a Dividend Champion with 38 years of consecutive dividend increases, through crashes and high times. The 5-year dividend growth rate is 36.9%, while the dividend growth rate last year was only 2.1%. The ttm p/e ratio is 26.28, but current p/e is 14.62 and forward p/e for 2012 is 10.37.

     

    One must watch out in a cyclical industry for the crash, like May 2008. However, dividend yield can be good when purchased at the 4% yield point. The company has only 48.8% debt to total assets ratio.

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  • buildingyield4years
    , contributor
    Comments (304) | Send Message
     
    Norman

     

    Is this a screaming buy below 33, or do you think the bottom is yet to come for this cyclical stock?
    9 Oct 2011, 12:40 AM Reply Like
  • Norman Tweed
    , contributor
    Comments (7395) | Send Message
     
    Author’s reply » buildingyield4years--I bought it this summer at the 4% yield point, $36.25. With the end of this business cycle coming by 2013, you still have some time for price appreciation. When the market falls the support will be the dividend, you can see it hit $28.28 from the interactive chart. I believe that was the bottom and it will head back up to at least the 4% yield point next year. It is a cyclical stock and what goes up must come down at the end of the business cycle. What I like about it is the consistency of the dividend growth rate (38 years).
    9 Oct 2011, 04:01 AM Reply Like
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