Goldman Sachs initiated bullish coverage on the metals and mining space, but the firm said investors still need to be selective about which stocks to buy.
The Analyst
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Goldman analyst Matthew Korn set the following ratings and price targets for metals and mining stocks:
- Initiated Freeport-McMoRan Inc (NYSE:FCX) with a Buy rating and $23 target.
- Nucor Corporation (NYSE:NUE) with a Buy rating and $78 target.
- Steel Dynamics, Inc. (NASDAQ:STLD) with a Buy rating and $59 target.
- Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) with a Buy rating and $42 target.
- Constellium NV (NYSE:CSTM) with a Buy rating and $16 target.
- Commercial Metals Company (NYSE:CMC) with a Sell rating and $25 target.
- Allegheny Technologies Incorporated (NYSE:ATI) with a Sell rating and $26 target.
The Thesis
Overall fundamentals in the North American mining and metals markets are very strong, Korn said.
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“Commodity prices are high, the supply side for metals and bulks looks more rational than it has been in years, M&M balance sheets are healthy (or at least healthier), and consumption has momentum from coordinated global growth, even as China gradually slows,” Korn said in the note.
Korn said copper is the most attractive metal for Goldman at the moment, and Feeport McMoRan has the most copper exposure of the names mentioned. In addition, Korn said U.S. steel mills are expanding capacity with the support of new trade policy and aluminum demand is strong driven by a booming transportation industry.
Price Action
Here’s a look at how the stocks now covered by Goldman were following the initiation Tuesday:
- Freeport McMoRan was up 2.1 percent.
- Nucor was up 0.6 percent.
- Steel Dynamics was up 0.2 percent.
- Schnitzer was up 1.3 percent.
- Constellium was up 1.9 percent.
- Commercial Metals was down 0.4 percent.
- Allegheny Technologies was down 1.2 percent.
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