Trade of the Day: Buy Steel Dynamics, Inc. (STLD) for 18% Gains

Steel Dynamics, Inc. (NASDAQ:STLD): This mini-mill producer of steel products manufacturers flat-rolled steel, structural steel, and special bar-quality steel and rails. It is also one of the nation’s largest metal recyclers and makes girders and decking for non-residential buildings.

Standard & Poor’s forecasts that over the medium-term, STLD will benefit from lower imports of steel and the low inventories in the industry, which should improve demand. They have trimmed their 2016 level of earnings by 13 cents per share to $1.92 but increased the 2017 EPS estimate by 20 cents to $2.55, both up sharply from 2015’s 54-cent loss.

Steel Dynamics is is praised for its top-tier balance sheet and excellent liquidity. S&P rates STLD stock a 5-star strong buy — its top rating — and targets the stock for appreciation to $45.

Since first highlighting STLD as a buy on Feb. 8 at $17 with a trading target of $22, it outpaced my expectations. The stock of this relatively small but productive steelmaker appears poised to break its recent high at $40.17, supported by a double CBR Buy at $35.50. The recent high was made following a run from a breakaway gap at $28.61 to $30.60 in early-November, and since then the price accelerated, backed by huge volume and extended accumulation.

MACD is arching up — another favorable technical indicator — and the recent close above the resistance line at $37.75 is a positive development.

Buy STLD at $38 with a trading target of $45. Investors may also consider this stock for longer-term results associated with the proposed investment in a refurbished national infrastructure.

Trade of the Day: Buy Steel Dynamics, Inc. (STLD) for 18% Gains
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Russell 2000

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