The steel industry struggled for much of 2013. Late in the year, Goldman Sachs (GS) upgraded the entire sector, including names like AK Steel (AKS). That was enough to lift this stock from the doldrums and make it one of the best-performing One-Year Sizzlers. The stock is up more than 70% so far this year, with most of that gain coming in the last two months.
Have we come too far too fast, or is this just the beginning of a rally that will continue in 2014? Analysts expect AK Steel to move from a loss in 2013 to a small profit in 2014. At current prices, the stock trades for 72 times 2014 estimated earnings.
I like the steel sector for many reasons looking ahead. China looks like it will be a big winner in the coming year and that will be good for steel. What I don’t like is the valuation for AKS, comparatively speaking. There are more interesting steel names to consider for 2014. In fact, one of those names made the cut for 2014 One-Year Sizzling Stocks.