Nucor Corporation (NUE), ArcelorMittal (ADR) (MT): Steel Producers Continue Their Slow Grind Back to Health

The company’s troubles extended into its fiscal first quarter, as it reported a net loss of $0.51 per share.

You’ll need nerves of steel

When I last visited steel stocks nearly two months ago, I took a cautious view on the sector in light of the ever-present struggles facing the industry. Since then, each of these stocks has continued to decline. While it’s rarely wise to try to time markets, at some point the bearish raid on steel stocks will have to end. These stocks trade for fractions of book value, and even though they are struggling to maintain profitability, the selling can’t continue forever.

Our society needs steel, as it is a basic material and a vital component of our infrastructure. Sooner or later, the global economy will recover and the world will find itself on much stronger financial footing. Investors should fully expect continued near-term volatility, but for someone willing to take a very long-term view, steel stocks may present a good opportunity after such a punishing sell-off.

In particular, Nucor Corporation (NYSE:NUE) looks to be one of the best managed, conservatively run steel stocks on the market. The company’s solid 3.4% dividend will pay investors willing to wait for the re-emergence of the steel industry. Moreover, the company has a long track record of raising its dividend, albeit at low rates. As a result, I’d recommend investors give preference to Nucor among the steel stocks.

Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Nucor. The Motley Fool owns shares of ArcelorMittal. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Steel Producers Continue Their Slow Grind Back to Health originally appeared on Fool.com is written by Robert Ciura.

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