Top Five All-Around Value Stocks: March 25

It is important to remember that any unexpected sharp downturn in oil and gas prices could negatively affect the earnings of the company. In addition, oil prices, which are highly volatile and cyclical in nature, are trading at a record level, and could be vulnerable to weaker economic conditions. High prices may also create demand for low cost alternatives, and could thus hurt overall demand for oil and gas products.

Nucor NUE manufactures steel products and is also one of the nation's largest recyclers of scrap metal. The company has facilities in 13 states. Nucor operates in two segments: steel mills and steel products. The steel mills segment produces both hot-rolled steel manufactured from scrap and cold-rolled steel made by further processing hot-rolled steel. The steel products segment produces steel joists and joist girders, steel deck, cold-finished steel, steel fasteners, metal building systems and light-gauge steel framing.

Our buy rating for Nucor has not changed since March 2004. We are encouraged by recent acquisitions and the company's ability to continuously maintain higher-than-average shareholder returns. During fiscal 2007, Nucor completed major acquisitions to foster product diversification and maintain a competitive edge. Recently, it acquired Nelson Steel, a producer of wire mesh and related products.

In addition, Nucor's subsidiary, Harris Steel, completed acquisitions of three companies, increasing its annual rebar fabrication capacity. Nucor also signed an agreement with Duferco Group to establish a 50-50 joint venture for the production of beams in Italy. These acquisitions and ventures should have an immediate positive impact on earnings.

As for shareholder returns, Nucor's return on equity increased to 29% at the end of the fourth quarter of 2007. During the fiscal year, the company repurchased approximately 14.1 million shares at a cost of $754 million, and still has 30.0 million shares to be repurchased under the current authorization. This should help support ROE going forward.

According to the International Iron and Steel Institute, global demand for steel is expected to rise 6.8% in 2008, and this positive industry trend should benefit Nucor. Bear in mind, however, that any increases in scrap steel costs could negatively impact the company's margins and profitability, as could weak demand from the automotive and housing sectors.

Freeport-McMoRan FCX explores for, develops, mines and processes ore containing copper, gold and silver in Indonesia, North America, South America and Africa. The company also smelts and refines copper concentrates in Spain and Indonesia. Its principal asset is the Grasberg minerals district, which it discovered in 1988.

We have rated Freeport-McMoRan a buy since January 2005. We believe the company's high reserve base and increased production activities could support improved performance in the near term. As of December 2007, Freeport-McMoRan had total recoverable reserves of 93.2 billion pounds of copper, 41 million ounces of gold, and 2 billion pounds of molybdenum. The company has significant development activities under way to expand copper production capacity, extend mine lives and develop large-scale underground ore bodies. For the fourth quarter of 2007, Freeport-McMoRan reported an increase in revenue to $4.18 billion from $1.64 billion in the fourth quarter of 2006. Net income also increased, rising from $441.6 million to $478 million.