United States Steel ( X ) will release its fourth-quarter results after the market close on January 31, with the consensus calling for earnings of $0.03 per share. During the same period last year the company had a loss of 23 cents per share, and the stock has risen 398% over the last year.
X was recently trading at $33.22, down $5.92 from its 12-month high and $27.07 above its 12-month low. Overall technical indicators for X are bullish with a strong upward trend. The stock has recent support above $31.30 and recent resistance below $35.30. Of the 13 analysts who cover the stock, four rate it a "strong buy", six rate it a "hold", and three rate it a "strong sell". The stock receives S&P Capital IQ's 4 STARS "Buy" ranking.
Optimism is running very high on the steel sector at this time, as President Donald Trump has made it clear that increased spending on infrastructure will be a key part of his plan to create jobs in the U.S. Another reason for optimism is Trump's plan to build a wall on the Mexican border. Such a project would require a huge amount of steel, which is why United States Steel, as well as other stocks in the sector enjoyed strong gains after the election. After years of losses, X has returned to profitability, and Wall Street has driven the stock sharply higher in reaction. After posting a loss of 23 cents per share during its fourth quarter last year, Wall Street expects a modest profit of $0.03 this year. If the company is able to hit its forecast, the stock will break out and possibly rise to a new 52-week high. X is now trading at $33.22, but analysts have an average price target of $36.00, suggesting 8.4% upside potential.
Stock Only Trade
If you want a bullish hedged trade on the stock, consider an April 19/24 bull-put credit spread for a 45-cent credit. That's a potential 9.9% return (43.0% annualized*) and the stock would have to fall 26.4% to cause a problem.
If you want to take a bearish stance on the stock at this time, consider an April 45/50 bear-call credit spread for a $0.40 credit. That's a potential 8.7% return (37.8% annualized*) and the stock would have to rise 36.6% to cause a problem.
Covered Call Trade
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Originally published on InvestorsObserver.com