Nucor: A Steal in Steel?

05/03/2017 2:50 am EST

Focus: COMMODITIES

Jimmy Mengel

Editor, Outsider Club

Nucor (NUE) is the single-largest steel producer in the United States. It is also the largest “mini-mill” steelmaker, meaning it uses electric arc furnaces to melt scrap, explains growth and income expert Jimmy Mengel, editor of The Crow's Nest.

The sheer amount of steel the company recycles makes it the largest recycler of any material in all of North America.

The company operates in three segments: Steel Mills, Steel Products, and Raw Materials. Its product offerings include sheet steel, bar steel, steel fasteners, wire and wire mesh, and ferrous and non-ferrous metals.

This under-the-radar dividend aristocrat has show incredible growth each time the market bottomed. Here’s what happened after the 1987 crash:

chart 1

That’s an 845% gain. But this isn’t an isolated incident. In 2001, after the “Tech Wreck” had wiped out 50% of the S&P, the steel giant soared for a whopping 991% gain. In other words, this is a great company to buy after the market bottoms.

In a cyclical market like steel, these are impressive facts about the company culture. That cyclical market can lead to swings in stock price, so this one is definitely a buy-and-hold type stock. As you can see from the chart below, the company has experienced both the up and down cycles.

chart 2

But after the seesawing, it’s still up 56.64% over the past 5 years — not counting the dividend. That’s a solid retirement stock.

We’ve seen a nice flow so far this year. We’re adding to Nucor on pullbacks, preferably in a DRIP. The company should do quite well if Trump follows through on his war on Chinese steel, and also gets a bipartisan infrastructure plan together.

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