AK Steel Holding Corporation
) reached a new 52-week high of $9.89 on Aug 11, exceeding its
previous high of $9.67. The stock pulled back a bit to end the
trading session at $9.83 on that day.
The steel maker, which has a market cap of around $1.3 billion, has
seen its shares catapult roughly 175% over a year versus around 17%
gain for the S&P 500 for the same period. Average volume of
shares traded over the last three months is around 6,174.5K.
What's Driving AKS Up?
Shares of AK Steel are heading higher following its
forecast-topping second-quarter 2014 results, reported on Jul 29.
Both revenues and adjusted earnings for the quarter topped Zacks
Consensus Estimates. The company saw higher sales in the quarter on
increased shipments. It expects improved results on a sequential
basis in the third quarter.
AK Steel, a Zacks Rank #3 (Hold) stock, is benefiting from strength
in the automotive market and higher shipment of steel products to
automakers. The company gets more than half of its revenues from
this market which continues to show strong momentum.
AK Steel expected to continue to gain automotive market share in
2014, driven by continued solid demand for its carbon and stainless
steel products from its automotive customers.
AK Steel is also investing to procure about half of its iron ore
and coal requirements internally. It is making good progress with
its first coal mine at AK Coal and is ramping up mining volumes. AK
Steel is also making significant progress with its iron ore pellet
project at Magnetation. Both these strategic investments are
expected to improve the company's cost structure and strengthen its
position in the years ahead.
AK Steel, last month, agreed to buy Severstal North America's
integrated steelmaking assets for $700 million in cash. The
acquisition, which will also include a cokemaking facility and
interests in three joint ventures that process flat-rolled steel
products, will be beneficial to AK Steel in a number of ways. The
company will get access to highly modernized and upgraded
steelmaking equipment and facilities and will also be able to
attain cost synergies by saving purchase, transportation and
AK Steel should also benefit from the favorable pricing trend for
key raw materials such as iron ore, coke and coal. Its results in
the third quarter are expected to benefit from lower iron ore
Other Stocks to Consider
Some other stocks worth considering in the steel space include
Grupo Simec S.A.B. de C.V. (
), United States Steel Corp. (
) and ThyssenKrupp AG (
). While Grupo Simec retains a Zacks Rank #1 (Strong Buy), both
United States Steel and ThyssenKrupp hold a Zacks Rank #2
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