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PrintIf you expect our recovering global economy to boost demand for steel as more construction and infrastructure projects get underway, then you should consider adding steel to your portfolio. Meet Nucor (NYSE: NUE), a compelling steel company.
Nucor has grown into the largest U.S.-based steel producer by doing things differently. For starters, none of Nucor’s plants are unionized. But it still treats its employees well, offering a performance-based compensation plan including profit sharing and a 401(k). (That’s right – no pension.)
The company hasn’t laid off an employee for financial reasons in more than 30 years. Unlike its rivals, Nucor has been profitable in almost every year of the past decade, even with a recent oversupply depressing steel prices.
Whereas steelmakers typically have huge central facilities, Nucor employs smaller, efficient, locally based mini-mills. It also crafts a lot of steel from scrap metal instead of via metallurgical coal. Nucor recently bought Skyline Steel, specializing in large-scale steel foundations, which will boost its range of operations.
With a price-to-earnings (P/E) ratio in the 30s, the stock doesn’t appear to be cheap. But those numbers will change as earnings pick up, and Nucor merits at least a spot on your watch list. For patient believers, its dividend recently yielded 3.1 percent.
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