US Steelmaker Poised For Steady Upside: Technicals Key
Our view that Nucor would remain an outperformer in the US steel industry, which we initially discussed in mid-February 2014 (see 'Nucor Set To Be Outperformer In Problematic Industry,' February 11, 2014) is supported by Nucor's recently released Q114 earnings. We expect this trend to continue in 2014 based on the following factors:
The company remains broadly exposed to the US automotive, machinery, and housing sectors. Our industry teams hold positive views towards these sectors' growth prospects over 2014.
Nucor retains a lower cost structure than competitors such as US Steel and AK Steel, an important differentiating trait given overcapacity and subdued prices will continue to weigh on the broader steel industry. Nucor's gross, operating, and profit margins have consistently outperformed the latter two.
Despite Recent Residential Slowdown, Positive Outlook Remains US - Durable Good Orders (LHS) & Private Housing Starts (RHS)