NEW YORK (TheStreet) -- As with most commodity industries like aluminum and oil, steel stocks have lost their luster over the past couple of years. But that hasn't stopped investors from skating to where they believe the puck will be in 2014.
As evidenced by the 60% and 117% 6-month stock gains in US Steel (X) and AK Steel (AKS), respectively, bets have been placed on the expected rise in steel prices. While demand has ticked up a bit since the second half of 2013, it's nonetheless premature to assume that growth will be sustained and prices will remain high.
To that end, it's a bit surprising that shares of Nucor (NUE - Get Report), which have soared more than 22% over the past six months, have done as well as they have. For instance, unlike Steel Dynamics (STLD), Nucor hasn't been able to capitalize on the recent optimism either from a revenue or gross margin perspective.
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As the largest steelmaker in the U.S., I'm not suggesting that Nucor isn't a well-run company. The margin issues aside, very few rivals, including AK Steel and U.S. Steel, can compare to Nucor when it comes to efficiency. My issue, though, is with the valuation, specifically the stock's P/E of 36, which presumes long-term outperformance.