I'm Reiterating my Buy rating for United States Steel Corporation (NYSE: X), first recommended on April 15, 2009 at a price of $27.61. Shares are up a cool 59.5% since that time. The rationale for owning X's shares remains the same: US Steel will likely be a survivor in the consolidating global steel sector with sufficient scale to either produce raw materials and acquire raw material assets.
Relatively stable production costs, a secular increase in tubular goods used for oil and natural gas exploration, and rising emerging market steel demand adds to the positive story. The First Call FY2009/FY2010 EPS estimates for X are a loss of -$10.91 to a profit of 92 cents.
Still, X remains a choppy, volatile stock, so if you can't tolerate $10 price moves in a week or so, X is not for you. If you have nerves of steel, however, you'll benefit form X's results.
Stock Analysis: US Steel is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in X now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your X position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $16.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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