Reliance Steel & Aluminum Co. RS stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this metals service center company an intriguing choice for investors right now.
What Makes RS an Attractive Pick?
Solid Rank & VGM Score: Reliance Steel currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Reliance Steel has outperformed the industry it belongs to over a year. The company’s shares have gained around 16.8% over this period, compared with roughly 7.7% growth recorded by the industry.
Positive Earnings Surprise History: Reliance Steel has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of roughly 14.8%.
Solid Growth Prospects: The Zacks Consensus Estimate for earnings for third-quarter 2018 for Reliance Steel is currently pegged at $2.70, reflecting an expected year-over-year growth of 107.7%. Moreover, earnings are expected to register an 81.1% growth in 2018.
Upbeat Outlook: Reliance Steel, during its second-quarter call, said that it is optimistic about business conditions for the third quarter and sees continued improvement in the end markets in which it operates. The company expects demand to remain strong in the third quarter.
Reliance Steel is gaining from its broad and diversified product base, wide geographic footprint and continued demand strength across aerospace and automotive markets and synergies of acquisitions. The company continues with its aggressive acquisition strategy to tap growth opportunities.
Moreover, demand in the aerospace market has been driven by higher commercial aerospace build rates. Strong demand is also witnessed in the automotive market, backed by increased use of aluminum in the industry.
Reliance Steel is also expected to continue to benefit from a favorable metal pricing environment. The company’s average selling price per ton sold rose 9.6% on a sequential comparison basis in the second quarter, exceeding its expectations of 5-8% increase. Strong demand coupled with Section 232 trade actions on imported steel led to higher pricing in the second quarter.
Reliance Steel expects average selling price per ton to be up 1% to 3% in the third quarter from the second. This should support its margins in the third quarter.
Reliance Steel & Aluminum Co. Price and Consensus
Reliance Steel & Aluminum Co. Price and Consensus | Reliance Steel & Aluminum Co. Quote
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Celanese Corporation CE, Ingevity Corporation NGVT and Air Products and Chemicals, Inc. APD.
Celanese has an expected long-term earnings growth rate of 10% and a Zacks Rank #1. The company’s shares have gained around 18% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has an expected long-term earnings growth rate of 12% and a Zacks Rank #1. The company’s shares have rallied around 61% in a year.
Air Products has an expected long-term earnings growth rate of 16.2% and carries a Zacks Rank #2. Its shares have gained roughly 14% over a year.
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