Nucor Corp is a
manufacturer of steel and steel products (hot rolled steel shapes and cold
finished bars, joists and deck) utilizing scrap, electric furnaces, continuous
casters and automated rolling mills.
While the company is highly susceptible to economic conditions, it
nonetheless the company has grown earnings and dividends at an 18-20% pace over
the last 10 years earning a return on equity as high as 35%. It should continue to generate an above
average return over the course of an economic cycle because:
(1) very
diversified client and geographic base,
(2) highly
variable cost structure,
(3) an
aggressive acquisition program (latest: Skyline Steel) that concentrates on
purchases that is accretive via new cost saving technologies or add-ons to its
product line,
Negatives:
(1) continued
sluggish global economic growth, especially in Europe
which is NUE ’s largest market,
(2) surging
imports,
(3) it is in a
highly competitive industry.
Nucor is rated A
by Value Line, carries a 36% debt to equity ratio and its stock yields 2.8%.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
Ind Ave 2.3 7 36 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
Ind Ave 37 7 NA 4 NA
*NUE
pays bonus dividends which distort the dividend statistics.
Chart
Note:
NUE stock made good progress off its November 2008 low, surpassing the
downtrend off its May 2008 high (straight red line) and the November 2008
trading high (green line). Long term it
is in an uptrend (blue lines), though it has challenged the lower boundary of
that trend several times in the last two years.
Intermediate term, it is in an uptrend (purple lines). The wiggly red line is the 50 day moving
average. The Dividend Growth Portfolio
owns a full position in NUE. The stock
is currently on the Dividend Growth Buy List.
The lower boundary of its Sell Half Range is $113.
11/14
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