Monday, February 9, 2009

Monday Stock Pick: X

Okay ... trading has stopped for the day, so here is your Monday stock pick ... US Steel.

Yea - I know ... China makes cheaper steel and what not - but we are the United States (and since we make most of the steel abroad), so we will always have the more superior product.

Seriously though ... USX is trading extremely close to its 52-week low of 20.71 - the stock closed today at 35.05 (up .89, probably on news that this blog post would be published).  On the opposite side of the spectrum, the stock has a 52-week high of 196 (how the mighty have fallen).

Why do I think you should buy this stock?  Well, let me start with why I think you shouldn't buy this stock - there are two reasons.  The first is that the company is headquartered in Pittsburgh, any company stupid enough to base their operators out of Pittsburgh has a few screws loose.  Heinz does it - and they make good ketchup - so I guess there must be some redeeming qualities about Pittsburgh (cue a deluge of posts from Corrupt).  The second is that they like unions ... you know how I feel about this one, but we have seen what unions and Nancy Pelosi have done to this country - and it's not pretty.

That said ... what is good?  USX is undervalued - that is a fact.  The company took a hard hit due to the downturn in car manufacturing and the end of the building boom, but people have failed to realize that Obama and his team of magicians have dreamed up a huge infrastructure investment ... and you can't rebuild this country without steel.  Steel is all over the structural backbone of this country and will continue to be ... additionally one of these days people are going to start buying cars again (and yes, even hybrids use steel), and people are going to be building office buildings again.  Steel is here to stay, there is no question about it.

Also of a sidenote - it seems that the company pays a dividend, which is a nice little bonus.  I don't personally believe that a company whose stock has been sliced from 196 to 35 should be paying anything, but that is their choice ... I guess the board wants to keep people invested, but I would not be hurt or shocked if they decided to eliminate the dividend.  They also had really good 4th quarter earnings - which has been helping their stock work its way back up.

You can check out all the good deets at Google Finance: here, but save yourself that step and just head to whatever online brokerage system you use and buy the X.  P/E is 1.94. EPS is 18.08.

Disclosure: If I can find some cash I am planning to buy some US Steel, probably no more than 100 shares though.  I believe what I write. 

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