Steel Stock Selloff a Buying Opportunity: Poll
NEW YORK (TheStreet) -- When U.S. Steel (X) - Get Report reported fourth-quarter results on Tuesday last week, the company added a big dose of murk to what investors and analysts had hoped to be a fairly clear narrative of recovery.
Up until that point,
-- U.S. Steel shares reached a 52-week high in early January. A huge chunk of the stock was, however, in the hands of short sellers (as of Jan 15, nearly 23% of the float).
The selloff in U.S. Steel shares probably made some of those shorts a good bit of money. Shares of the Pittsburgh manufacturing icon lost nearly 20% of their value last week; heavy trading in the name marked each session.
Also last Tuesday, the country's biggest steel producer, the scrap recycler
Nucor
(NUE) - Get Report
,
. They weren't nearly as bad as U.S. Steel's, but Nucor did indicate that the construction industry remains so distraught that any talk of full recovery is premature.
Nucor's lukewarm quarterly results followed what appeared to be a buoyant fourth-quarter report out of
AK Steel
,
. Basically, analysts are worried about AK's ability -- as well as the ability of the rest of the industry -- to deal with rising raw materials costs at a time when demand for steel doesn't appear quite strong enough to support a price hike.
AK shares shot higher by 7% after it released its earnings report, but the stock gave back those gains over the course of the rest of the week. Nucor shares shed 7.7% over the same span.
Given these mixed signals, we put it to readers of
TheStreet
: Was it time to ditch steel stocks, taking profits after the ride north to those 52-week highs? Or, conversely, did last week's nosedive present investors with an opportunity to double down on what appears to be a bet on the recovery of the U.S. economy? As a kind of control group, we threw in the third options: hold steady, do nothing, wait it out.
The results were clear: Readers of
TheStreet
-- or, at least the people who chose to take this poll -- are steel bugs. Just short of 56% of the approximately 2,500 survey-takers believe that buying steel stocks now is the smart move.
On the other hand, just 15% of voters counsel ditching steel shares, while almost 30% put themselves in the noncommittal "hold" camp.
-- Written by Scott Eden in New York
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