By skyforbes Hey All,
TLDR: MT $70 target book value / fundamental value. Catalysts are huge technical breakout, perfect alignment of fundamentals, and possible gasoline on the fire if the Ukraine war ends, or possible announcements on rare earths like everybody else. They have a lot of mines.
I have built a bit of a specialization in steel stocks. Caught the huge run in NUE in 21', the X buyout in '23, and again when it went through among some other trades. I thought I'd share my latest trade idea. Mittal Steel is the largest global steel company outside of China with operations globally.
Weekly Chart: Massive breakout and trading at a 12 year high. Global profile in 2nd screen shot.
General notes below.
- MT
- Target: $70 18X Long Run Earnings conservative, $70.75 Book Value
- Q EPS Growth: 31.36% 255.75% (14.18%) 86.85%
- Q REV Growth: 3.03% (1.99%) (9.11%) 1.11%
- Next Q EPS: 31%, 9%, -5%, 61%
- Next Q REV: 7%, 3% next two years
- Catalysts:
- Technicals
- Technicals very strong. Trading at a decade high. Huge breakout
- IWM huge long term breakout
- Fed QE
- Long hated stock
- Fundamentals
- Probably 2nd best run steel company globally after Steel Dynamics
- Bought back almost 40% of shares in the last 5 years. Huge ongoing buybacks.
- USA, EU, Canada Protections and more seem to be coming to keep China steel out. Everywhere MT operates is looking to protect their industry.
- And over the last four years combined, capital spending amounted to $15.49 billion resulting in $1.9 billion in through cycle EBITDA coming (step change in profitability), Very Cheap,
- M&A target (BHP, RIO, NUE?), 50% of FCF going to buying back shares. Nearly 40% in the last few years. Nice dividend.
- China steel exports may or may not be sustainable. Iron ore prices rising. Massive China Stimulus + recovering market.
- Number 1 global volume outside of China which everybody is putting tariffs on.
- Trading 1/2 of Revenue, 63% of Book Value
- Europe waking up. Massive German/Europe Stimulus. Global stimulus. Back to strength globally from trough? Europe Anti dumping cases. 22% USA Profits.
- Drove at least $3-4 in value taking over Calvert a huge plant when the Nippon deal to acquire U.S. Steel went through. . Strongest price action of all steel companies. New market leader.
- Catalysts
- Massive Technical Breakout + Fundamental factors above.
- If the Ukraine War Ends we will pop massively due to huge steel demand to rebuild. MT has extensive Ukraine and EU assets.
- Any mention of rare earths it could rocket even if it is a gimmick.
Positions