Stelco Holdings Inc. (STLC.TO) Buy, Sell or…

Stelco Holdings Inc. (STLC.TO)

68.14

-0.28 (0.41%)

as of Nov 4, 2024, 9:00:00 pm Market Open.

110 watching

BUY

Close to $19 EPS this year. Paying down debt quickly. Pulled back to $43. With the demand for infrastructure plus capital spending, it's hard to see how steel companies won't do very, very well.

COMMENT

Thinks there is a play in steel, although this is no longer early. Would play the steel play through ZMT. Stelco is a good name here although it has already had a good run. 10% range correction is possible. Use the past corrections as a guideline for entry.

SELL ON STRENGTH

He bought it early last year, because they opened a new furnace in Hamilton. Fundamentally, they're basking in higher steel prices, but can they stay high? The new furnace expands their margins a lot. Sell at high-30s/low-40s, because this is a cyclical stock.

PARTIAL SELL

They will generate huge cashflow. Not sure if the steel prices are sustainable at these prices. China is easing back from growth so this could hurt steel prices. Private equity that brought back STLC to market is selling some now. Earnings in 2022 will be lower than 2021 due to peaking. Gets nervous about paying a high premium.

BUY

The commodity price is always going to be the main driver. She has been adding to her position. There is a lot of good things happening at the company.

TOP PICK

A recovery opening trade. They reported some hedging losses that initially caused a sell off. The next few quarters will be very, very strong. They are a low cost producer. The do not have a peak multiple so there is upside there. (Analysts’ price target is $28.50)

STRONG BUY

China buys a huge amount of steel and iron ore, so this will benefit Stelco and those commodity prices. The current CEO is very good. This has huge upside with strong real estate value. Will produce strong cash flow to the point that he predicts the dividend to return.

TOP PICK

It has had a great run but he sees more upside. Steel prices this coming winter are in the $800/tonne range which is higher than they have been in years. They are going to be one of the lowest cost steel producers. He sees it doubling from here over the next couple of years. (Analysts’ price target is $18.40)

RISKY

A re-capitalization of the older company. It has started to come back. They signed a contract to get pellet supply, that seems favourable. They have some valuable land holdings in Hamilton. A nice risk-reward for some people on a small scale. He does not see enough safety around the dividend to recommend to his clients.

DON'T BUY

It's a cyclical play, so if you're optimistic about the market in coming months, you can buy it, but he would be careful and cautious. He's not optimistic about the latter half of 2020.

BUY ON WEAKNESS

He bought on weakness recently. Steel prices have fallen in years, but this company is well run. Have strong cash flow and renegotiated their debt. If steel rebounds, this will do very well, but be patient. Yields 3.9%.

SELL

Wouldn't buy or hold it. Would be a seller. Steel prices are in freefall with no relief in sight. Stock is not cheap, despite the downward slope of the chart. Macro environment not good, global growth slowing.

BUY

Asking about US Steel He prefers Stelco in this space. Stelco is well-run, not American and trading at a low valuation. Stelco is in great shape since emerging from bankruptcy.

DON'T BUY

Down pretty significantly today. Probably more for contrarian investors. There is risk and there are safer places.

PAST TOP PICK

(A Top Pick Oct 02/18, Down 44%) They had a second quarter miss. They are affected by steel prices. It is still a really well run company. They cleaned up the balance sheet and pension issues. There is value in these companies if you hold them for 5 years. He will continue to hold it.

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Stelco Holdings Inc. (STLC.TO)