AK Steel Strikes New 52-Week High - Analyst Blog

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Shares of AK Steel ( AKS ) reached a new 52-week high of $8.58 on Jul 3, eclipsing its previous high of $8.55. The stock retraced to end the trading session at $8.42 on that day.

The steel maker, which has a market cap of around $1.2 billion, has seen its shares skyrocket roughly 176% over a year. Average volume of shares traded over the last three months is around 6,284.1K.


What's Driving AKS Up?

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's automotive shipments were at their highest level in seven years in the first quarter of 2014. The company is 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. Production of first pellets is expected by fourth-quarter 2014 with a ramp up to full capacity in 2015. Both these strategic investments are expected to improve the company's cost structure and strengthen its position in the years ahead.

AK Steel should also benefit from the favorable pricing trend for key raw materials such as iron ore, coke and coal. The company expects to gain from lower costs of coal and coke in 2014 with some benefits are expected to be seen in the second quarter.

Other Stocks to Consider

Some other stocks worth considering in the steel space include Universal Stainless & Alloy Products Inc. ( USAP ), Grupo Simec S.A.B. de C.V. ( SIM ) and ThyssenKrupp AG ( TYEKF ). While both Universal Stainless and Grupo Simec retain a Zacks Rank #1 (Strong Buy), ThyssenKrupp holds a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AKS , SIM , USAP , TYEKF

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