Steel Stock Boasts Intriguing Entry point

An unwinding of analyst pessimism could fuel tailwinds

Deputy Editor
Mar 14, 2023 at 12:29 PM
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The shares of Nucor Corporation (NYSE:NUE) are 1.9% higher this afternoon, last seen trading at $158.31. The equity is about to snap a three-day losing streak, and looking to add to its 20.7% year-to-date lead. Even better, the steel stock is trading near a historically bullish trendline that indicates even more gains could be right around the corner.

Nucor stock just came within one standard deviation of its 100-day moving average, after spending a considerable amount of time above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, six similar signals have occurred in the past three years. Nucor stock enjoyed a positive return one month later in 67% of those instances, averaging a 10.2% gain. From its current perch, a move of similar magnitude would put NUE at $174.46.  

NUE Chart March 142023

An unwinding of pessimism from the brokerage bunch could send the shares higher, as five of the seven in coverage still recommend a tepid "hold" rating. Further, the 12-month consensus price target of $150.92 is a 5% discount to NUE's current level of trading.

Now appears to be a good time to weigh in on the security's next move with options, as premiums are attractively priced. This is per Nucor stock's Schaeffer's Volatility Index (SVI) of 43%, which ranks in the relatively low 32nd percentile of readings from the last 12 months. Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) of 89 out of 100 means NUE has exceeded option traders' volatility expectations over the past year.


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