Goldman Sachs Kicking Steel While It’s Down (AKS, STLD, TX, CMC)

247wallst — Thu, 09 Oct 2008 07:28:00 +0000

It is a bit surprising when you see a firm like Goldman Sachs downgrade many key steel stocks after their shares have fallen by so much. That is what we are seeing this morning. Many steel stocks are down more than 75% from their recent year highs. It sees lower steel and scrap prices on deteriorated demand in the coming months. Below is the firm’s downgrade list, although Commercial Metals (NYSE: CMC) was actually upgraded.

AK Steel (AKS) Cut to Sell from Neutral. AK Steel closed at $14.17 yesterday and it is down sharply from a high of $73.07.

Steel Dynamics (STLD) Cut to Neutral from Buy. Steel Dynamics closed at $9.51 yesterday and it is down from a high of $40.92.

Ternium S.A. (TX) Cut to Neutral from Buy. Ternium closed at $9.98 and is down from a 52-week high of $45.99.

Goldman Sachs did issue one upgrade in the sector. Commercial Metals (CMC) was raised to Buy from Neutral. This one is indicated higher after closing at $10.58 yesterday. It is down about 70% from its $39.80 52-week high.

Jon C. Ogg
October 9, 2008

Posted in Analyst Calls, Metals Tagged: AKS, CMC, STLD, TX

Cramer’s Speculating Where? Venezuela? (HNR, TX)

247wallst — Fri, 06 Jul 2007 18:06:59 +0000

Cramer has two speculative plays down in Venezuela to make money off of. He thinks the nationalizations have already happened and the bad news is baked in. If you are a ‘safety and stability’ stock investor you might want to stop reading here. This strategy will result in one of two things: Rags to Riches OR the Boulevard of Broken Dreams.

Harvest Natural Resources (NYSE:HNR) focuses on 3 small fields in Venezuela. The deal they made isn’t as bad as it looks, they have a deal through 2026 and now got smaller rights to 3 more fields. He thinks there is even a shot that they could get the concessions that Exxon Mobil (XOM) and ConocoPhilips (COP) walked away from. Two-thirds of these reserves are not proved. He can’t justify more than a $15.00 price to pay, but he doesn’t think that it will be expensive until $15.75.

Cramer thinks the one steel stock in Venezuela that is safe is Ternium (NYSE:TX) because it is an Argentinian compay rather than a U.S. company. Chavez likes Argentina, even if he hates us. Ternium is in talks to get a deal to keep it from getting nationalized. This one also operates elsewhere in Latin America.

Well, one thing is probably a lock: these are indicated higher after Cramer’s comments……. BUT, there are so many places you can invest that you don’t have to take this sort of risk. If I was going to follow either of these, I would MUCH rather be investing in an Argentinian company in Venezuela rather than a fellow company from my own Gringolandia doing business in Venezuela. BUT (again a but), putting your money down there is like giving a huge loan with no collateral and without a legal contract. The exception is that you could get hosed in Venezuela even with the collateral and the legal contract. Remember the Golden Rule: He Who Has The Gold Rules! Right now Chavez is the one that has the gold.

Jon C. Ogg
July 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

24/7 Wall St. » TX

Goldman Sachs Kicking Steel While It’s Down (AKS, STLD, TX, CMC)

Cramer’s Speculating Where? Venezuela? (HNR, TX)