Saturday, October 19, 2013

"Time to look ahead to 2014 and see what sectors are looking favorable. One area is Steel, and Steel Dynamics, Inc (STDL) is one company with a favorable earnings outlook"

Dow Jones Industrial Average 15,23711 (Up) Week ending 10-11-2013
Dow Jones Industrial Average  15,399.65 (Up) Week ending 10-18-2013

It sure feels like a blow-off top at the end of this week in the Momentum stocks. Google, Chipotle Mexican Grill and Amazon just exploded to the upside. But I think we are very close to a top in these Netflix and type momentum stocks and folks should start locking in some profits on these names. Don't get sucked in and be buying them here!

Looking ahead to 2014, it appears that Steel will be one good area to deploy some capital.

Steel Dynamics, Inc. (Symbol STLD, $18.09) appears to be an aggressive way to play this now for 2014.  The company has been no slouch this year being up 39.15% in stock price year to date.  The PEG ratio on the company is 0.83 (according to Yahoo Finance) and the Return on Equity is a low 5.08 but improving next year. The company is paying a 2.43% dividend currently and this is expected to rise also to 2.60% dividend in the future.

STLD has a Current Ratio of 2.58,  so they are very financially stable. The Book Value on the shares is $11.10, so this seems like a pretty good value at $18.00. Operational Cash flow is $386 Million dollars for the trailing 12 months. (TTM).

Steel Dynamics, Inc. is projecting earnings per share of $0.85 for 2013 and for 2014 earnings per share look like $1.46 per share, a big rise, and one which would have the stock sitting at a PE of 12 at the current. Insiders for the last 6 Months have been doing nothing but purchasing.

And guess what? They employ a lot of people in Plants around the USA. Gotta like that!

The Company does between $7-8 Billion a year , so it is a good solid MID-Cap stock for your portfolio.

Freewilly is a big advocate for diversification between Small Cap,  Mid Cap and Large Cap stocks in your portfolio.

Too many people's portfolios are lopsided towards owning too many Large Cap stocks.

The idea here is to start preparing for your 2014 portfolio. Unload the stock ideas that have failed this year and take profits on some of your Momentum stock superstars to offset.
Sullivan County, PA,  near Laporte
Enjoy your Autumn weekend,

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