Steel companies’ moving averages
Traders and investors also look at moving averages while making market entry or exit decisions. Typically, if a stock is trading way below its 100-day moving average, it’s an indication that the stock is oversold. Similarly, if a stock is trading much higher than its 100-day moving average, it indicates an overbought position. So, are steel companies’ recent moving averages telling us something? Let’s see.
U.S. Steel is below its moving average
U.S. Steel (X) is trading almost 12% below its moving average while the company’s consensus one-year target price represents an upside of almost 13%. Nucor (NUE) is trading only 1% below its 100-day moving average. It’s important to note that Nucor has one of the healthiest balance sheets in this industry. It’s the only US steel company to carry an investment-grade (BND) credit rating.
AK Steel (AKS) is trading almost 5% above its 100-day moving average. AK Steel is the only steel company among the stocks we’re covering that has breached its consensus one-year price target. In our previous series, we had noted that despite its mounting debt pressure, AK Steel could be the steel industry’s underdog.
Steel Dynamics (STLD) is another steel company trading higher than its 100-day moving average. According to current analyst estimates, the stock has an upside potential of 22%.
ArcelorMittal (MT) is trading 30% below its 100-day moving average. Consensus analyst estimates suggest a healthy 88% upside for ArcelorMittal. However, the company faces significant near-term headwinds, especially with regards to its near-term debt maturities. We discussed these issues in our analysis of ArcelorMittal’s 4Q15 financial results.
Meanwhile, along with the technical parameters, investors should also look at the different fundamental drivers. Let’s begin by looking at the recent trend in US steel demand in the next part of the series.