US steel? X What do you think?

[Thogey]

$12 a share?

for $2500 you could have 200 shares with a 2 PE ratio. Option play? stay away?

[68Camaro]

For me it's all about their leadership, plans, state of the business, age of their capital, how much labor is union vs non-union. I would have to research it. Steel has been neglected in general in the US, so unless they've been working in the background on revitalizing (and why would they have done that, under Obama), I would be skeptical without data.

[Thogey]

Their accounting is scaring people because they recently wrote off huge capital investments. They are vulnerable to a recession, is the fear? They are pressed all over the table and if the economy sevens out?

[silverflake]

I used to love using Price/Book ratio to find undervalued stocks but over the 10-15 years the accounting shenanigans in even the most well run companies makes using P/B a bit dicey. But, X has a P/B of 0.5! In theory, all else remaining equal (and believable) it's current price is less than the value of its parts! Under valued by 50%...again, in theory. Hmmm, will put on radar and maybe look for this downtrend to at least pause and form a base if not turn up. Just be aware this stock was as low as $6.15 back in 2016.

Be cautious. Continue to stack.

[Recyclersteve]

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[Recyclersteve]

Low P/E ratios can be a HUGE trap. I remember one from years ago in the same industry. It was Bethlehem Steel, which had one of the greatest ticker symbols of all time, namely BS!

I remember looking at it when the P/E was 2 and almost bought it for my own personal account. Glad I didn't. Shortly thereafter the stock declared bankruptcy. Don't remember the specifics about what happened to common shareholders, but they are at the back of the line in bankruptcies and almost always get nothing or perhaps a few pennies on the dollar.

You need to dig into this much more deeply if you still want to speculate on it. Let's say they really did earn the amount of money per share that is being shown. If a bunch of that is something extraordinary (for instance, they won a lawsuit which contributed to most of the earnings), then you need to strip that amount out and recalculate the P/E. I am going to assume that if they could legitimately earn that much money from actual steel production instead of other stuff, that this could be one superb buying opportunity for someone inclined to be a contrarian investor.

Another thing: The stock hit a new 52-week low of $11.67 yesterday. Yahoo! Finance shows that about 70% of the stock is owned by institutions. Why is that important? If this goes below $10 a share, there are institutions that would be forced to sell stock. I'm not saying they would all sell at the same time, but if you have the majority of large shareholders looking to get out at approximately the same time, a stock can fall really sharply in a few weeks to months. I'd hazard a guess to say that if it closes below $10 a share in the near future, then it will go to $5-7 a share before catching a decent bounce.

And of course the whole trade situation with China (which goes back and forth so much it makes me sick) is very difficult to get a handle on.

If you want to buy long calls and do it as a lottery ticket type gamble, that would be about the only way I can think of to play it. Below $10 a share and the short sellers will be smelling blood on this one. I say all of the above having almost 20 years experience in the financial industry where I worked as a stock broker and day trader. Also, I sold short various stocks several thousand times with my own personal money and this is precisely something I'd have on my watch list as a possible short.

Keep in mind that someone who buys the stock and someone who shorts it could BOTH make money- depending on how gracefully they enter and exit their stock positions. Good luck with whatever you do.

[Recyclersteve]

Another thought- the whole infrastructure improvements that have been talked about for years now could give this a big boost assuming our politicians could get together and act like adults for once.

[DTEJD1997]

I frequently deal in the low P/E area of the market. It is what makes sense to me.

X current P/E may be a 2, but is it going to stay there?

At first glance, it does not appear to be that going forward. Analysts have X earning anywhere from $2 at the high end to losing $.50 at the low end.

If Trump is re-elected, I think there is a good chance of increased infrastructure spending, likely good for X.

By most measurements, X has a low valuation.

If you like the steel area, have you looked at CLF?

Another area that I like and am heavily invested in is the auto & auto parts sector. You've got to be very careful, but there are several good companies that are being mis-priced.

[Recyclersteve]

I still stand by everything I said on June 2nd. Nothing has really changed as far as I can tell.

Some people might try to play this in a different way. I don't know what your thesis is about U.S. Steel, but if you think that steel consumption is gonna go up, it still is difficult to predict which companies will win bids for big contracts. That said, playing nickel might be a possible consideration instead. Roughly 2/3 of nickel production goes into making stainless steel. If you think steel production is going up, buying Norilsk Nickel (Ticker: NILSY) might be an alternative to trying to pick a steel producer. Also, Tesla cars use a lot of nickel. A few points about nickel:

1) There aren't a lot of miners who produce nickel and, for most of the producers, nickel is only a small part of their output. It would be a bit like the concept of buying G.E. because they sell light bulbs. So keep that in mind.

2) There is a major nickel producer out of Russia (I know- political risk with Russia) called Norilsk Nickel. It trades with the symbol NILSY. It has done well lately and is much closer to a year high than low, yet still has a P/E ratio of just 9. There aren't a lot of others to trade other than penny stocks not traded on major exchanges. I've traded NILSY several times over the last 10 years or so and had very good results with it. But I wouldn't flinch if it went down 20-30% with no good apparent reason. I have typically just doubled down in this type of scenario. Dividend on NILSY is over 10%, which will excite some people, but there is no such thing as a truly safe 10%. Also, even if the divided is paid in full over the next year, if the stock goes down 20%, what good is that? In other words, don't just buy because of the dividend. Generally, I want to have 3 or more reasons before buying a stock. Being in an uptrend (as NILSY is) does count as one of the three reasons in my opinion.

3) A way that I have also played nickel is out of the stock market by acquiring Canadian .999 nickel coins from 1922 to 1981 except several war related years in the 1940's and 1950's when the composition was changed. Nickel is about $8.21 per pound right now per KitcoMetals.com. It was around $5.25-$5.30ish in January. So it has had a great year so far. Yet the all-time high of over $23 from Spring 2007 is nowhere close. So that tells me it may have a good ways further to run. Even more than a good ways if you add in inflation for the last 12+ years.

If you are dead set on steel stocks, do some research on Schnitzer (Ticker: SCHN) and Nucor (Ticker: NUE) as well. They do a lot of recycling, and, from my name, you might be able to tell that I have a soft spot for those who are careful about wasting our precious resources. I haven't traded SCHN and NUE for at least several years now, so do your own research before investing in either.