Category Archives: $X

45% Rally in $X (US Steel) could be an opportunity in $AKS(AK Steel)…

Last tweeted these names back in February 2014.Goldmans called the potential rally in steel stocks correctly and
$X has had an amazing 45% run since end of July to $40.

$AKS has consolidated above $10, but may have further upside based on FV’s below.

$X FV=35 (17% 5Y Growth Rate) PX=40
$AKS FV=17 (16% 5Y Growth Rate) Px=10.5

$AKS has 50% more potential upside relative to $X.

Trade Ideas:
Buy at 10.50, Take Profit Target $15.5, Stop 7.5
OR Wait for for AKS to consolidate above $11, then buy with TPP=$16 stop $8.
OR Wait for Credit Default Swaps to tighten in $AKS to under 300bp. The Credit is still a bit wide $AKS but has rallied 100bp since August, then pull the trigger if the stock is below $11.50.

2CentView has a core position in $AKS, and looking to add a trading position.

$AKS, $X US Steel stocks continue to go lower…

Approaching the $23 stop on US Steel, FV lower at $25 now.

$AKS – FV=15, so could re-enter at $6 if you sold at $8. Credit Default Swaps still imply debt is too high at $AKS – hence why stock is trading at such a discount to Fair Value.

If the CDS drops to below 400bp with Stock below $7 it is worth buying…
but investors not in love with US Steel stocks at the moment, even with the prospect of commercial and retail construction growth.

$AKS up 14% vs $X up 5% in a day… but is $AKS the better return?

$AKS outperforming $X but this was certainly the more riskier of the 2 stocks, given cost of debt levels being twice as much as $X. Cost of Debt now come in nearly 100bp, which partly accounts for the better performance of $AKS. Take profit at 8 (FV=8.5) if you got in below 6.
I took more conservative position in $X which is also doing well but less risk. Higher the risk greater the reward – but also more to lose on the downside.
So don’t always think about the returns – think about the risk you are taking versus your return [ technically known as the Sharpe Ratio!]

$AKS – hit my alert of $5.5 but $X looks better FV=9 and 37

$AKS has more potential upside by high debt levels – CDS Spreads in the 800 area indicates there is still high leverage/default risk.
Better opt forr US Steel, $X where FV=37 so still good upside potential, but lower debt levels CDS Spread = 400bp. If you think the US Steel market will recover, buy $X, tp=$35, stop $23 for 2:1 RR. Look at the stock prices in mid 2008 just before they fell off a cliff!