STEEL: Why you should slowly buy it back up
There are other sectors out there behaving just like the Steel sector.... Such as the Fertilizer sector.
Both sectors (and possibly others) have been punished beyond my wildest dreams.
While I have bailed out of the Fertilizer Sector at the absolute best, luckiest, time.... I haven't done so for Steel.
I carry 120 shares (a small amount for certain) of (SID) CSN Brazil Steel corporation.
I think the steel sector is going to be big time pain for at least another 10 months. Seriously....10 more months of heart ache. I base this on Jim Cramer's June 2009 Housing Sector bottom call.
If Jim Cramer is approximately correct with his housing bottom and my theory is correct that the Steel Sector gets an upgrade as soon as housing begins to recover again...
Then it is simple... You buy and buy and buy into whatever Steel Stock you have as we approach lower and lower share prices. Your steel stock is getting a lower P/E multiple based on a slowing global economy and falling steel prices and China's end of the building boom. A lot of things are playing against the Sector to make a lot of investors pull out their money.
Fine.... Let them run! Let them hide!
Just means us Steel Stock investors get to buy more shares of our Steel Stock at even better prices.
And you may label me a moron, jerk, idiot, ignorant fool, complete nimrod, dillweed....all you want.
But here's the reason you keep buying/holding your shares in Steel:
1) most of these companies are expanding their businesses year over year
2) Most of these companies are doing share buy backs year over year for the next 2-3 years!
3) (SID) and other steel companies have gotten upgrades in their credit scores by Moodys.
I mean I can go on and on and on. The theory is that when recovery begins and Steel looks good again the P/E multiple that Steel gets will be even bigger and better than ever before.
SID at $50? PISH POSH..... The longer it takes Steel to recover and become a booming sector again... the better the P/E multiple will end up being for all steel stocks in the sector.
Also.... Share Price depreciation and economic slowdown tends to create Steel Consolidation.
We already have seen AKS (Steel) seeking a buyer! Who else wants to be bought? Wants to merge?
Namisa is getting sold.... I mean.... A lot is happening with the steel industry that will really look amazing years from now. Just watch... Starting June 2009 you are going to thank me for this advice