Heavy Metal Earnings Surge - Analyst Blog
June 16 2011 - 9:05AM
Zacks
No less than five steel stocks currently carry the esteemed Zacks
#1 Rank (strong buy) this week. And four of the five have been
there for over a month.
In the list below, the first three are classified as standard
producers and occupy a Zacks Industry Rank of 163, near the bottom
of the Neutral category. The last two names are considered
"specialty" steel companies and their industry grouping holds the
26th spot, making it very worthy of attention.
AK Steel (AKS): Zacks #1 Rank
since April 1, largely because consensus earnings estimates have
risen in the last 90 days from $0.84 to $1.26 for this year, and
from $1.46 to $1.87 for 2012.
Olympic Steel (ZEUS): Zacks #1
Rank since May 10, due to analyst estimate revisions in the last 60
days going from consensus $1.69 to $2.54 this year, and from $2.19
to $2.63 for 2012.
Universal Stainless & Alloy
(USAP): Zacks #1 Rank since April 29, on the heels of estimate
boosts in the last 60 days from $2.50 to $2.83 for this year, and
from $2.90 to $3.54 for 2012.
Allegheny Technologies (ATI):
Zacks #1 Rank since April 29, based on analysts upping their EPS
projections in the last 60 days from $3.00 to $3.17 for this year,
and from $4.24 to $4.85 for 2012.
Citic Pacific (CTPCY): Zacks #1
Rank since May 26, after upward estimate revisions in the last 30
days took this year from $1.20 to $1.44 EPS and next year from
$1.44 to $1.73.
Two Caveats for #1 Steel
Stocks
Before you rush into buying any of these names, let
me highlight two areas for further research. First, the Zacks Rank
is designed to be a short-term timing indicator, alerting you to
high-probability upside in stocks with upward earnings estimate
revisions in the last 60 days.
A few of these picks are getting "long in the tooth" and could get
knocked out of the #1 Rank if better stocks with new upward
revisions come along since we only focus on analyst estimates for
the last 60 days.
Second, milder economic data in the past two months
has definitely tilted the stock market downward as the "path of
least resistance," especially in a seasonally weak time of year. I
wrote about this on May 31 when the S&P 500 was at 1,345.
And if we needed confirmation that this slowdown could get more
serious, yesterday's surprisingly weak Empire State Manufacturing
Survey provided a wincing blow. As Steve Reitmeister wrote in his
daily market comment for Zacks Premium Subscribers this
morning:
"The -7.8 reading is only the second negative
reading in 2 years. The last time was a little blip in November
before jumping back into positive territory. Is it the same this
time around or does it portend ill for the future? Add into the mix
Greek riots and, voila, we are back under Dow 12,000 once
again."
The bottom line is that steel stocks are
experiencing a strong earnings recovery as the global economy
continues the cyclical expansion on the back of emerging markets
growth. Keep your eye on these names and their Zacks Rank as you
may want to buy them at a nice discount from where many were
trading a month ago.
Kevin Cook is a Senior Stock Strategist
for Zacks.com
AK STEEL HLDG (AKS): Free Stock Analysis Report
ALLEGHENY TECH (ATI): Free Stock Analysis Report
UNVL STAINLESS (USAP): Free Stock Analysis Report
OLYMPIC STEEL (ZEUS): Free Stock Analysis Report
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