Steel stocks have been strong on growing optimism that the worst is over for pricing, but Gerdau has been even stronger on growing optimism for a stronger recovery in Brazil.
Construction and industrial indicators are pointing higher in Brazil, giving credibility to Gerdau's 6-8% long steel growth forecast, and margin leverage could be meaningful.
Gerdau shares are more or less trading in line with my estimate of fair value, but further bullishness over Brazil could fuel further gains.
I liked Gerdau (NYSE:GGB) for its leverage to a Brazil recovery story back in October, and the relatively short time since, that story has really caught on with investors. Between the prospect of