Steel stocks are attracting strong buying interest as the market searches for direction in the early days of 2023. Steel Dynamics (STLD), Tenaris (TS), Nucor (NUE) and U.S. Steel (X) are among the top steel stocks to watch.
Fort Wayne, Ind.-based Steel Dynamics makes steel rolls, decks and joists. It also recycles metal products.
The Steel-Producers group ranks ninth out of IBD’s 197 industry groups, after moving up in rank dramatically in recent weeks. Steel Dynamics has a near-perfect Composite Rating of 98, out of 99, and a Relative Strength Rating of 97. Shares may offer an early entry buy price at 113.22.
In the third quarter, sales of this steel stock grew 11% to $5.6 billion while earnings rose 10% to $5.46 per share. Fourth quarter results are due Jan. 25. The company and analysts expect profits of $3.34-$3.38 per share for the quarter.
Steel Dynamics joined the S&P 500 in December. It ranks second in the group, with mutual funds owning 56% of outstanding shares. More fund managers have been buying the industry leader for the past eight quarters, boding well for positive price performance.
Former IBD Leaderboard Stock
Former IBD Leaderboard steel stock Tenaris ranks first in the group, ahead of Steel Dynamics.
TS shares broke out of a flat base with a buy point of 35.15 in December. It fell after breaking out and is now approaching the buy point once again.
The steel stock has a perfect 99 Composite Rating and high 94 Relative Strength Rating. The European steelmaker makes tubular metal products for the energy industry. Sales grew 70% to $2.9 billion in the third quarter while earnings per share of $1.03 rose a staggering 84%.
Meanwhile, Nucor is building a deep cup base with a 188 buy point. Volume picked up when the steel stock rebounded from its 50-day line on Tuesday. The Charlotte, N.C.-based company has a 95 Composite Rating and 92 Relative Strength Rating. The relative strength line is at a 52 week high, a bullish indicator.
Q3 sales grew 2% to $10.5 billion while earnings of $6.50 per share marked an 11% decline. Nucor ranks third in the group. It makes engineered bars, carbon steel plates, and specialty steel products for agriculture and infrastructure companies. Mutual funds own 45% of Nucor shares.
Steel Stocks: U.S. Steel Approaches Buy Point
U.S. Steel’s 93 Relative Strength Rating and 73 Composite Rating lags other technical parameters.
This steel stock broke out of a flat base with a buy point of 28.46 in February but slipped after the breakout. It moved sideways after a long interval, finding support along the 50-day line in December and is approaching the buy point once again.
However, Q3 sales and earnings declined, with revenue falling 13% to $5.2 billion while $1.95 earnings per share marked a staggering 66% decline.
Pittsburgh’s pride makes high strength and coated steel for industrial applications. 51% fund ownership highlights strong institutional investing in the company.
Please follow VRamakrishnan @IBD_VRamakrishnan for more news on growth stocks.
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