NUE - Nucor: Attractive Amidst M&A And A Favorable Long-Term Outlook

2024-06-04 09:38:48 ET

Summary

• Nucor announced an acquisition of Rytec as it diversifies its business, which should be an incremental positive.
• Q1 earnings showed strong steel mill profits but some moderation in the value-add segment, but Q2 guidance was softer.
• Nucor's cash flow and balance sheet remain strong, with potential for further buybacks and future growth.
• Looking past quarterly fluctuations, stimulus and tariffs support domestic steel producers, and cash flow should accelerate as projects are completed.

Shares of Nucor ( NUE ) have been a solid performer over the past year, rising about 26%, but shares have been falling over the past two months, amid mixed guidance. On Monday June 3 ^rd , Nucor announced another acquisition as it gradually diversifies its business, and I view such efforts positively. I last covered Nucor in December , reiterating it as a “buy.” However while the stock did briefly reach my $200 target, performance since that reiteration has been disappointing, with NUE down 4% while the market has rallied by 11%. I would use weakness to add....

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