Let’s get right to it.
Steel stocks have been crushed recently, but are starting to show signs of life. And the Trump administration is bound and determined to level the playing field for U.S. producers.
Whether steel gets help from D.C. or not, this market is oversold and ripe for a bounce. That’s because inventories and production have declined, while demand is set to surge thanks to infrastructure spending. So, we recommend you buy shares of an old favorite: AK Steel Holding Corp. (AKS).
This is one of the lowest-cost domestic producers we’ve been tracking for some time. In fact, we earned two rounds of gains in AKS, 64% and 46.7%, back in November.
Now, several factors are coming together that warrant a new long position, including:
Bullish Force #1: U.S. Commerce Department ratcheting up investigation (Section 232) into oversees dumping of cheaper steel imports. And that’s seen lifting demand for U.S. supply.
Bullish Force #2: Fundamental backdrop for U.S. steel producers, like AK Steel, is improving. This is confirmed by this week’s analyst upgrade on the sector from Credit Suisse.
Bullish Force #3: Price action in AKS registered bullish turnaround from severely oversold levels earlier this week. This comes after the stock erased its post-election advance and is now poised for a stretch run higher.
Here’s what we recommend:
Using 5% of the funds you have allocated to this service, buy AK Steel Holding Corp., symbol AKS, at a limit price of $6.20 or better. Once filled, go ahead and place a good-till-canceled protective sell-stop at $5.10.
Get this order in right away. Hold all other positions and stay tuned for new trades coming your way again very soon.
Good Investing,
Mike and David
