And the steel producer and metal recycler could rise even more due to strong demand and a healthy dividend. But another likely reason is Big Money lifting the stock.
Big Money Likes Steel Dynamics
So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.
Smart money managers are always looking for the next hot stock. And Steel Dynamics has many fundamental qualities that are attractive.
This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares.
You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.
That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals STLD has made the last year.
The last few months have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:
In the last year, the stock attracted 16 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.
Now, let’s check out technical action grabbing my attention:
Year-to-date outperformance vs. Materials Select Sector SPDR ETF (+14.3% vs. XLB)
Outperformance is important for leading stocks.
Steel Dynamics Fundamental Analysis
Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Steel Dynamics has been growing sales and earnings quite well. Take a look:
3-year sales growth rate (+24.0%)
3-year EPS growth rate (+147.6%)
Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.
In fact, STLD has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.
STLD has a lot of qualities that attract Big Money. It’s made the Top 20 report 19 times since 2006, with its first appearance on 03/13/2006…and gaining 852.1% since. The blue bars below show when Steel Dynamics was a top pick:
It’s been a top stock in the materials sector according to the MAPsignals process. I wouldn’t be surprised if STLD makes additional appearances in the years to come. Let’s tie this all together.
Steel Dynamics Price Prediction
The Steel Dynamics rally could have further to go. Big Money buying in the shares is signaling to take notice. Shares could be positioned for further upside, plus it pays a current 1.7% dividend. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a diversified portfolio.
Disclosure: the author holds no positions in STLD at the time of publication.
Learn more about the MAPsignals process here.
This article was originally posted on FX Empire