Martin Vlcek
Contrarian, growth at reasonable price, macro, small-cap

A.M. Castle Will Outperform Despite Cyclical Headwinds, Thanks To Strong Restructuring

A.M. Castle & Co. (NYSE:CAS) is on track to continue delivering strong restructuring benefits and strategic changes despite soft end markets and 10% lower sales guidance. The company will also strongly benefit from the future market rebound as well as further restructuring that is expected to last until the end of 2014. As a result, I am convinced that this stock is an attractive long-term buy with a strong stock price upside of up to 70% within five years. However, the 40% downside risk is a concern from a risk-to-reward point-of-view.

Due to the large levels of net debt, the book value level at which the stock currently trades provides just an artificial support. I expect the...

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