AK Steel Holding Corporation (NYSE: AKS) produces
carbon, stainless and electrical steel products. The firm makes cold-rolled and aluminum-coated stainless steel for automakers, provides energy efficient electrical steels to makers of power transmission and distribution equipment, and sells hot- and cold-rolled carbon steel to construction companies, automakers and industrial machinery producers. It also manufactures carbon and stainless steel tubular products and makes antimicrobial coated steels for appliances. The firm has major plants and offices in Ohio, Indiana, Kentucky and Pennsylvania. Clients include Ford Motor (NYSE: F), General Electric (NYSE: GE) and Toyota Motor (NYSE: TM).
The stock is up 30% so far in Q2, on word of a solid Q1 earnings report (4/22) and several successful price increases/surcharge levies. The firm said that soaring global steel prices and favorable labor contracts have enabled it to boost profits beyond expectations. Analysts have pointed to expansion in developing economies and historically low levels of inventory as the factors fueling demand.
The news
has kept AKS shares cycling through a positive ten-week trading channel. The price is rebounding from the base of that channel, suggesting the potential for a rise back toward the top.
Brokers recommend the shares with eight "holds" and one "sell". Analysts see a 20% average annual growth rate, through the next five years. The AKS PEG ratio (0.93), Price to Cash Flow ratio (12.48), EPS Growth rate (60.71%), Return on Assets (8.54%), Return on Investment (10.63%), Return on Equity (52.18%) and Revenue per Employee ($1.03M) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 80% of the outstanding shares. Over the past 52 weeks, the stock has traded between $27.90 and $73.07. A stop-loss of $61.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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