This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Steel Dynamics' Recovery Already Priced In

NEW YORK ( TheStreet) -- The recent activity in shares of Steel Dynamics (STLD - Get Report) affirms that when sentiment in a once-struggling industry takes a turn for the better, investors prefer to align themselves with an industry leader rather than laggards. While I don't necessarily have a problem with that, it just doesn't always work.

Unlike ArcelorMittal (MT) and U.S. Steel (X), underperformers in the trailing twelve months, Steel Dynamics stock enjoyed close to 50% gains in 2013. But investors seem to have quickly forgotten that back in December, management issued fourth-quarter earnings guidance in the range of 21 cents to 25 cents per share, which would (on the low end) represent a 22% year-over-year decline. The company's clearly getting the benefit of the doubt

Steel Dynamics has a solid reputation as a leading producer of integrated steel, yet has shown no immunity to what remains a brutal steel environment hurt by weak prices and slumping demand. With shares now resting near 52-week highs, investors still resting their faith on an uptick in non-residential construction must decide if there's immediate value in these shares relative to what Steel Dynamics can realistically offer in the future. And I don't believe the risk-reward tips in their favor.

Steel Dynamics is due to report fourth-quarter earnings Monday. Hoping that there's hidden value to the slight improvement in flat roll pricing, investors have disregarded management's cautious tone. Even if pricing did perk up, there's still too much at stake here to believe that it will be enough to offset the weakness in overall steel shipments or the recent increase in scrap costs.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
STLD $25.21 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs