Buy the Dip on This Slumping Steel Stock?

Insteel stock is down 10% in June

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Insteel Industries, Inc. (NYSE:IIIN) is an American manufacturer of steel wire reinforcing products for concrete construction applications. While earnings are roughly three weeks away, stocks tied to infrastructure and commodities are always worth a deeper look, especially after the scorching-hot May many in the steel sector just had.

Insteel Industries will report third quarter earnings July 14 before the open. IIIN has outperformed industry expectations on all four of its most recent earnings reports, resulting in three post-earnings reactions to the upside, including a 7.2% bull gap last April.

Despite a 42% year-to-date gain, IIIN 9.5% haircut this month. The good news is that this pullback has so far found support at the shares' 160-day moving average. A bounce from this trendline could mean Insteel stock can make another run at its May 10 record high of $41.66 perhaps later this summer.

IIIN Stock Chart

Insteel Industries stock is an intriguing value investment. It currently trades at a price-earnings ratio of 16.55, which is a decent valuation considering its big upward move over the past year. Additionally, IIIN has grown revenues by about 34% since fiscal 2017 and has already increased revenues by nearly 10% since reporting its fiscal 2020 results. On the flip side, in fiscal 2019, Insteel Industries' net income fell a drastic 85%. Nonetheless, Insteel Industries has recovered admirably since that time, with net income increasing by a whopping 600% since fiscal 2019. In general, Insteel Industries stock is an intriguing opportunity at the moment after IIIN’s recent dip.

 

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