{"id":11822,"date":"2023-05-21T19:20:24","date_gmt":"2023-05-21T23:20:24","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/steel-dynamics-a-steel-stock-to-watch-nasdaqstld\/"},"modified":"2023-05-21T19:20:26","modified_gmt":"2023-05-21T23:20:26","slug":"steel-dynamics-a-steel-stock-to-watch-nasdaqstld","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=11822","title":{"rendered":"Steel Dynamics: A Steel Stock To Watch (NASDAQ:STLD)"},"content":{"rendered":"
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Introduction<\/h2>\n

It’s time to discuss Steel Dynamics (NASDAQ:STLD<\/span>)<\/strong>. This Indiana-based steel giant is one of America’s best-performing industrial stocks and one of the few high-quality dividend growth stocks in that industry. After starting 2023 the way it ended 2022, by rapidly rising to new all-time highs, the stock has run into resistance. Its stock price is now roughly 30% below its all-time high.<\/span><\/p>\n

In this article, I want to discuss why the stock did so well, why it is now selling off, and what secular developments like supply chain re-shoring mean for the company behind the STLD ticker.<\/p>\n

So, let’s get to it!<\/p>\n

A Remarkable Steel Stock<\/h2>\n

With a market cap of roughly $17 billion, Indiana-based STLD is America’s second-largest steel company. Not only that, but the company is an outperformer. As the chart below shows, the company has consistently made new highs during economic upswings.<\/span><\/p>\n

Earlier this year, the company’s stock price was 160% above its 2018 peak, which makes STLD one of the best steel stocks in the world. Moreover, the chart below displays the ratio between STLD and the steel ETF (SLX), which shows that STLD usually outperforms its peers during stock price rallies.<\/p>\n

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TradingView (STLD, STLD\/SLX)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

One of the reasons why the STLD stock price is in a long-term uptrend is the fact that the company is producing value-added steel products.<\/p>\n

Companies that produce basic steel products are usually way more prone to commodity prices with limited pricing power. This isn’t the case when dealing with STLD. Roughly two-thirds of its product portfolio is value-added steel.<\/p>\n

Coated steel, which is the company’s biggest product category, is ideal for uses that require resistant, aesthetic, light, and cost-effective materials. This includes construction, automotive, and other sectors.<\/p>\n

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Steel Dynamics<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

In these categories, the company is the market leader, which allows it to go far up the value chain of various steel products.<\/p>\n

In this case, the company doesn’t just have strong pricing power, but it also enjoys high margins and returns on invested capital. In both categories, the company is a leader in both economic upswings and downswings.<\/p>\n

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Steel Dynamics<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Not only does this data show how resilient the company’s margins are during downswings, but it also explains why STLD is a source of outperforming capital gains.<\/p>\n

The company also has an incredibly healthy balance sheet. The company has $3.5 billion in available liquidity, most of which is cash on hand.<\/p>\n

Furthermore, STLD has no debt maturities in 2023 and a net debt ratio of less than 0.3x EBITDA. Even the total debt ratio remains below 1x EBITDA. The company enjoys a BBB credit rating. At the end of this year, the company is expected to have $130 million in net cash, meaning more cash than gross debt.<\/p>\n

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Steel Dynamics<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

This company also comes with a strong dividend track record.<\/p>\n

The STLD Dividend & Shareholder Commitment<\/h2>\n

STLD doesn’t just come with steady long-term capital gains, but it also has a fantastic dividend scorecard. The company scores high on safety, growth, and consistency.<\/p>\n

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Seeking Alpha<\/p>\n<\/figcaption><\/figure>\n<\/p>\n