Steel Molten Hot

Editor's note: RealMoney.com is free to all TheStreet.com readers until Monday night. We hope you enjoy this article, which originally was published May 19. If you would like to subscribe to RealMoney.com, please click here.

These steel companies put through price increases so fast it is hard to put a multiple on them.

Right now, with U.S. Steel's(X Quote) growth rate a historic 5%, you simply can't justify its 12 multiple.

But if you put through several price increases in a quarter, the earnings estimates are, as you know, dead wrong. We see as much from the UBS target-boost, and the $200-a-share target. (Elsewhere, I have a piece about Johnny-come-lately and off-course analyst upgrades, but this one still has resonance because it is not an upgrade from hold.)

I think that things are so strong, you have to sign up, now, for some of that Nucor(NUE Quote) that just got offered!

In the old days, you would have the steel analysts raising numbers throughout the quarter after chatting with the CFO. That's over. Reg FD ruined that. So what you get is a steady move up as people calculate the price increases and try to press the multiple upward.

A shortage worldwide plus a voracious Chinese bid justify the endless runs for both X and Nucor, both of which have good raw costs and overhead (contrast that with Carpenter Tech(CRS Quote), another player that missed the quarter.)

These companies cannot quit until the price increases don't stick. It's been so long since we have had this kind of commodity lift -- really since the 1980s -- that people forget how these stocks trade.

When you lump the lack of trading expertise with the lack of updates, courtesy of Reg FD, you get this levitation act. So get used to it.

Random musings: I continue to believe Honeywell(HON Quote) is too cheap and has lots of room to run.

At the time of publication, Cramer had no position in stocks mentioned.