Why Nucor Is Poised to Pull Back

Before you go, we thought you'd like these...
Before you go close icon

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Nucor slipped about 1% this morning after Citigroup downgraded the steel giant from "buy" to "neutral".

So what: Despite the downgrade, analyst Brian Yu raised his price target on the stock to $55 (from $52), representing about 2.5% worth of upside to yesterday's close. But while Yu remains positive on Nucor's exposure to a potential construction recovery, he believes that the stock's seemingly lofty valuation leaves little room for error.

Now what: Citigroup thinks Nucor might be too hot to touch right now. "Based on our new commodity price forecasts we are maintaining our EPS estimates for '13 / '15 of $1.43 / $3.75, while lowering '14 from $3.30 to $3.20, and raising our target price $55/sh," noted Citigroup. "However, we are downgrading NUE to Neutral from Buy following the recent share price appreciation as we no longer see sufficient upside over our 12-month time horizon to recommend the name." With Nucor shares up nearly 20% over just the past three months and sporting a forward P/E of 20, I'd agree that the risk/reward doesn't look too enticing at this point. 

More dynamic dividend picks
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Why Nucor Is Poised to Pull Back originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Nucor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading