Finding Profit in a Beaten Down Sector: Stage Set for Dramatic Rises in Steel Stocks
New buying pressure is been seen in steelmakers — an industry group that has been left for dead since January on a combination of global economic slowdown fears, stockpiling of industry metals in a stalling Chinese economy, and a stronger U.S. dollar.
That's reversing now, setting the stage for dramatic rises in steel stocks as shorts are forced to cover. Prices have been compressed for months and are now in extreme oversold territory. Just look at names like Cliffs Natural Resources CLF -0.60% , U.S. Steel X -0.40% , and AKSteel AKS -0.15% . All look ready to burst out of consolidation patterns as the shorts are squeezed and prices rebound. More than 36% of CLF's stock floatation has been sold short. It's 32% for X. And it's 28% for AKS.
All have returned to — or fallen below — early 2009 levels that were seen as the deepest, most painful economic turmoil since the Great Depression was ending. While thing's aren't great now. They're certainly better than they were back then as Chinese eases its iron grip on credit, the euro zone economy shows signs of stabilization (as Spain looks set to exit recession), and the Federal Reserve backs away from its tough "taper" talk amid a slight pullback in U.S. economic data.
Agreed completely! I typically always add the source and put quotes whenever I read a great article and want to share it with the board as it adds more validity to the article but in this case was in between meetings at work and just wanted to get this out to the board sooner than later keeping in mind that today is a very big day for our stock. I realize that I might have "stolen" this from Mr. Mirhaydari but the primary goal of this board is to share good or bad news and observations with one another specific to the CLF stock, not to win a nobel prize or doctorate in economics. Thanks for your understanding.
TCK earnings and revenue beat this morning. With prices falling, they managed to trim $250 million in cost with a target of $300 million. All these miners are cutting cost that will be carried forward as the prices for their products increase. TCK has cut their cost on met coal to $50 a ton and they are currently selling it for $143. Can you imagine the margins they will be achieving when it returns to $200 a ton?
We are going to see the same with CLF and it will be a much better company than it was in the past.
LOL. Very astute observation. It's because I hit the wrong button on my iPhone several times prior to posting. I now own 9,000 shares of CLF all bought around $18.50 so I am definitely bullish and a strong buy on CLFs!