TheStreet Ratings quantitative stock model maintains a Buy recommendation on Nucor Corporation (NUE) . Since initiating coverage of the stock on Nov. 9, 2001, the stock has never slipped into the Sell range of D+ or lower. The shares have appreciated by as much as 38.3% from the most recent upgrade to Buy from Hold on April 22, 2016.
If you prefer exchange-traded funds to holding individual stocks, you may want to consider funds with a large percentage of holdings concentrated in Nucor stock. The three funds with the highest percentage of their assets in Nucor are all Buy rated: SPDR S&P Metals & Mining ETF (XME) rated B+ with 4.6% of assets, VanEck Vectors Steel Index ETF (SLX) rated B with 4.5%, and Deep Value ETF (DVP) rated A- with 4.3%.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate NUCOR CORP as a Buy with a ratings score of B+. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 19.2%. Since the same quarter one year prior, revenues rose by 15.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market, NUCOR CORP's return on equity exceeds that of both the industry average and the S&P 500.
- NUCOR CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NUCOR CORP increased its bottom line by earning $4.10 versus $2.48 in the prior year. This year, the market expects an improvement in earnings ($7.24 versus $4.10).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.10 is sturdy.
- You can view the full analysis from the report here: NUE
—Reported by Kevin Baker in Palm Beach Gardens, FL
Disclosure: Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc. or any of its contributors.