Opinions

James Hodgins Stelco Inc STE-T BUY Dec 30, 2019

It should benefit from the free trade agreement. Steel prices have been firming up in Asia. It would have been a prime tax loss selling candidate.

James Hodgins

Owned

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PARTIAL BUY

A Canadian steel producer that emerged from bankruptcy about 5 years ago and went public again in 2017. A well run company in a cyclical sector. With a longer term view in mind, you could begin to buy in again here. But know that it could get worse before it gets better.

PARTIAL BUY

Recently risen from the ashes. Thematically, this is the type of thing you want to own this year. However, it's something to own for the good times and not for a long time as a commodity producer. It will pullback when the commodity prices drop.

HOLD

Daily volatility is because there isn't much of a float. Prices are not sustainable at these levels. Looking at lower earnings in 2022. Be wary of buying near the top of the pricing cycle. He hasn't been adding here.

RISKY

A trade, not a long-term hold. Steel is wildly cyclical. Has gone bankrupt at least twice and finds ways to get into trouble pretty reliably. Steel prices are very high right now, so you're looking at a maximum of 1-1.5 years of good times.

STRONG BUY

Really likes it and is a long position. Has multiple characteristics he likes. Strong price momentum, valuation is standout. Cheapest stocks on the TSX with high return on equity. trades at 6x cashflow. 3x price to earnings. Very low multiples.

SELL

We're going into a global slowdown, so this isn't one to own. Cleaned up balance sheet, took care of lingering issues.

WAIT

Ton of cash, healthy balance sheet. Lots of optionality to buy back stock. Great margins. Nothing exciting happening in the space right now, so don't put money in right now.

DON'T BUY

Hard business to run in North America. High energy, input & labor costs. Margins compressed due to competition with China. Difficult to compete internationally. Not a great business. Would not recommend buying.

BUY

Sideways chart on the stock. Has a defined trading range. Bouncing off support level. Might be a good time to buy. Wouldn't be surprised if hits $50.

BUY ON WEAKNESS

Does not own shares currently. Surprised how well share price has performed lately. Demand for products fairly high - suspects profits are strong. Current price is high - would wait to buy on weakness.

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James Hodgins Stelco Inc STE-T BUY Dec 30, 2019

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