Eric Bolling
Put out: 2 out. The oil industry is one of the biggest customers of the steel industry. Why? It buys tubular steel for a wide range of uses. The most obvious is the drilling deeper and deeper into the ground, sea or wherever they think they might find the stuff that goes for $125.85 per 42-gallon drum. Pipeline companies pipe the slick stuff from location to location and need steel for that. And finally, the refiners need steel for those much publicized antiquated refineries. The bottom line is that a customer with a fat wallet is good.
Put out: triple play complete. If all the news so far wasn't good enough, this finishes it. U.S. Steel recently decided to raise prices and analysts upgraded them. Wow, I guess the demand for the product is so strong they can not only add input cost surcharges, but they get The Street to applaud the move. I will bet the higher price sticks for a while even if the steel market gets soft (but, there seems to be nothing like that on the horizon). The triple stock play was and is U.S. Steel, based on its pricing power, Street sweetheart status and customer base. I also highlighted Mittal because of its strong presence in the emerging Indian and Chinese economies. It is also going to benefit from the U.S. Steel price change. And finally, I have always loved RIO. If you don't have iron ore, you can't make steel, and RIO is the world leader in iron ore mining. It accounts for 17% to 20% of the world production of iron ore (depending on who you talk to). This stock has been a Bolling fave for years and until things change in the commodity market, I will continue to like RIO.
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