Don't overlook Nucor's (NUE) share buyback
Posted November 20th, 2007 by Eric Cheshier
Back in September, Nucor Corp. (NYSE:NUE), the second-largest U.S.-based steelmaker, said it plans to buy back as much as $1.66 billion of its shares after profit rose to a new record.
Chief Executive Officer Dan DiMicco wants to boost Nucor shares after the stock fell about 20 percent since June. Falling steel prices and speculation metals companies were less likely takeover candidates after credit markets tightened helped send the stock to its lowest level in more than a year on Aug. 16.
Take a look at the last 6 months, the chart speaks for itself:
Fellow Stockmasters - it's now November 19th and shares have once again plummeted - 12% in the last month to be exact.
The buyback of as many as 30 million shares represents about 10 percent of the stock outstanding, and as far as I can tell they have purchased about 1/3 of that in the last quarter. We believe this to be a great opportunity to buy in before they start snatching up the other 2/3 of their planned buyback.
The company's Q3 performance was less than stellar, reporting a 29% decrease in earnings for the quarter. In spite of that, top line growth remains robust as the company reported an 8% increase in net sales.
The company said in a statement accompanying its quarterly report that it's been seeing a rise in demand for bar, beam and plate steel.
"We expect continued strength in bar, beam, plate and many of our downstream businesses. Market conditions for sheet are slowly improving with more balance between customer inventories and demand. We are also finally seeing a significant drop in imports, which has helped bring these inventories back into balance," the company said.
Reviewing the analyst coverage on Nucor and with shares now trading at $50, it's a good entry point thanks to the Bears tearing the market apart.
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If you're looking for a value play and a solid investment for years to come - look no further.
Article written by Eric Cheshier
Co-Founder of theStockMasters.com
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