Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, Nucor Steel is worth a review.

Nucor Corporation (NYSE: NUE) produces about 20 million tons of steel annually, and also is a major recycler of scrap metal.

In general, analysts expect NUE's revenue to increase 10-12% in FY 2008, aided by the Harris Steel acquisition and other acquisitions. Analysts also see strong demand for beams and bars, on continued non-residential construction growth.

The market's choppy, consolidating (or perhaps worse) pattern continues. Further, the steel sector remains vulnerable to a U.S./global economic slowdown, but one company that may hold its own is AK Steel.

AK Steel Holding Corp. (NYSE: AKS) is the third largest U.S steelmaker, and features coated, cold rolled and hot rolled carbon steel used by the automotive, appliance and manufacturing markets, among other buyers.

Analysts expect AK Steel Holdings' 2008 revenue growth to slow to about 2%-5% in 2008 after a 16% rise in 2007. Analysts expect stainless steel raw material surcharges to end, but carbon steel should show some price improvement as companies rebuild inventories.

Longer-term, analysts likely AKS' sector position, overall product mix, debt reduction, and cost containment (particularly regarding legacy costs). The Reuters F2008/F2009 EPS consensus estimates for AKS are $4.01/$4.33.

The risks? AKS remains vulnerable to companies' willingness to rebuild steel inventories, particularly the auto sector, which accounts for more than 40% of revenue.

The First Call mean rating for AKS is: Hold. [9 firms.] Mean 2008 target: $49.00. [high: $57, low: $45.]

Stock Analysis: AK Steel is a moderate-risk stock not suitable for low-risk investors. More-cautious investors may want to wait for a possible pull-back in AKS' shares to about $51, but keep in mind AKS's shares may not retreat to that level. Investors with an investment horizon longer than 2 years should be rewarded from AKS' shares. Sell / Stop Loss if you were to purchase shares in this company: $31.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Readers of this space know that my investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend as a support. With the above in mind, U.S. Steel is worth a review.

U.S. Steel Group (NYSE: X) is the fifth largest steel producer in the world.

Analysts expect U.S. Steel's 2008 revenue to increase 13-17%, primarily stemming from acquisitions. Further, distributor inventory levels reached unsustainably low levels in 2007, in the interpretation of many analysts, and the replenishing in 2008 should benefit X.

Meanwhile, oil producer country tube/tube-related products should remain strong, and additional steel sector consolidation should help the sector regain modest pricing power. The Reuters F2008/F2009 EPS consensus estimates for X are $10.87/$11.52.

The risks? Analysts remain concerned about rising raw material costs. A sustained global economic slowdown would hurt U.S. Steel's results.

The First Call mean rating for X is: Buy [15 firms]. Mean 2008 target: $119 [high: $134, low: $90].

Stock Analysis: U.S. Steel is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from X's shares. Note: A safer position would involve waiting for X's shares to pull back to the $110-115 range, but they may not retreat to that level. I'd consider a Sell / Stop Loss at $83.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Readers of this space know that my investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend as a support. With this in mind, Steel Dynamics is worth a review.

Steel Dynamics (NASDAQ: STLD) operates five electric arc furnace mini-mills and six steel fabrication facilities. STLD's customers include companies in the automotive, construction, and manufacturing industries, as well as steel processors and service centers, primarily in the Midwest U.S.

Analysts expect Steel Dynamics to post robust, 45-55% revenue growth in F2008, after an impressive 27% rise in F2007. Analysts also expect continued, strong demand for structural and bar products, and a recovery in STLD's flat-rolled steel business.

Further, analysts also say the sector's sales volatility will decline over the life of the business cycle, as a result of consolidation/mergers. STLD's strong balance sheet and low cost structure add to the favorable picture. The Reuters F2008/F2009 EPS consensus estimates for STLD are $5.30/$5.65.

The risks? A failure of the flat-rolled segment to recover would obviously hurt STLD's results.

The First Call mean rating for STLD is: Buy [11 firms]. Mean 2008 target: $61 [high: $80, low: $50].

Stock Analysis: Steel Dynamics is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from STLD's shares. Sell / Stop Loss if you were to purchase shares in this company: $38.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.