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Nucor: You Either Believe In Steel Or You Don't

Apr. 12, 2018 6:16 PM ETNucor Corporation (NUE)6 Comments


  • Steel has been a hot topic in the news of late thanks to President Trump’s tariffs in the industry.
  • Nucor has been beaten down, but we believe the fundamentals are the strongest they have been in years.
  • A look at the demand and supply metrics suggest continued tailwinds.
  • A simple fair value estimation suggests 15% upside with positive bias thanks to the fundamental setup.

Nucor (NYSE:NUE) is a steel manufacturer. As we all know, steel has been a hot topic in the news of late thanks to President Trump's tariffs in the industry. We are not here to debate the utility or the folly of the tariffs, however, we do know that the news has sparked waves of selling in the steel sector in recent weeks.

A few weeks ago, we highlighted Nucor as a potential long play at BAD BEAT Investing on a technical basis. In this column, we want to discuss the name in a bit more fundamental detail for the broader Seeking Alpha community to add some color to our buy rating. In general, we have a company doing a lot of things right, but getting punished with the sector through no fault of its own. If you believe in American steel, this is a play you should be aware of after the pullback we have witnessed in recent weeks.

Recent price action

Under the philosophy that we subscribe to we are looking for stocks that have been beaten down through little fault of their own, but remain fundamentally strong with technical support. The steel industry as a whole fits the bill following the selloff as a result of tariffs, but Nucor happens to be our favorite idea in the sector right now. Take a look at the action in the last 3 months:

Source: Yahoo finance

As you can see, the stock has taken a nice hit in the few weeks, and we believe that based on the fundamentals, the stock is a buy.

Who Nucor Is

Our many followers who are not up to date on steel plays, in general, may not be familiar with Nucor. You may not be aware, but Nucor is the largest mini-mill steelmaker using

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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in NUE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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