Steel Dynamics (NASDAQ: STLD) is the fifth largest producer of carbon steel products in the United States. The firm operates five mid-western electric-furnace mini-mills, producing merchant bars, engineered bar products, wide-flange beams, rails, and flat-rolled steels. It also runs six fabrication facilities, making joists, girders, and decking for non-residential construction projects. Steel scrap is processed at 42 locations in the eastern U.S. and Canada. Nucor (NYSE: NUE) and U. S. Steel (NYSE: X) are major competitors.

The company raised its second quarter outlook last week, citing "stronger than anticipated shipping volume and selling values for flat-rolled steel products and stronger volume and margins in recycling." Management predicted Q2 EPS of 90-95 cents (80-90 cent prior estimate, 89 cent Street consensus).

The stock popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with one "strong buy", three "buys" and seven "holds". The STLD P/E ratio (17.70), Price to Sales ratio (1.37), Price to Cash Flow ratio (12.45), Sales Growth rate (119.74%), EPS Growth rate (44.00%), Operating Margin (14.24%), Return on Assets (12.14%), Return on Investment (15.43%), Return on Equity (30.62%) and Revenue per Employee ($912.64k) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 68% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $16.81 and $40.50. A stop-loss of $33.75 looks good here. Note that management is expected to announce Q2 results on July 21st.

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.