Stocks to Short #1: United States Steel Corp (X)
United States Steel Corp (X) is battling the biggest problem a company like it can have: cheaper competition — in this case, from overseas.
Steel prices have come up off their April lows, but are expected to drop again because of this competition. U.S. steel price premiums are nearing a high compared to Chinese imports. In addition, several steel mills had outages during the first half of this year, but they have been repaired — that means more supply coming onto the market.
U.S. Steel sits on $1.3 billion in cash and long-term investments but is offset by $3.6 billion in debt. The debt isn’t cheap, averaging around 6.4% in interest, which translates to a little more than $200 million in interest payments annually. X stock is barely breaking even on an operational basis, and the debt payments drive the company into the red.
X stock is a stock to short.