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PreMarket Prep Stock Of The Day: US Steel

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PreMarket Prep Stock Of The Day: US Steel

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Every dog has its day and this dog U.S. Steel (NYSE: X) is having back-to-back good days and is the PreMarket Prep Stock Of The Day.

One Of The Worst Stocks Ever: Besides companies that went to zero, U.S. Steel may have the worst relative performance of any issue since June 2008. In that month, it peaked at $196 and ended that year $37.20.

At its current price of $9, it has yielded a negative return of nearly 1,000%. Over that same time period, the S&P 500 Index has returned 135%.

All Rallies Have Failed: Over the years, U.S. Steel has made several attempts to rally but all have failed miserably. The “Trump pump” with tariffs on steel instigated a rally from its January 2016 low ($6.15) all the way to $47.84 in March 2018, but slumped to end that year at $18.24.

In the greatest bull market of all time, it has withered from that level to a 12-year low at $4.54 in March.

Stock Offering In June Jammed Through Investors Pallet: While the issue was recovering from March and trying to stay in double-digits, the company submarined investors with a stock offering of 50 million shares at $8.58 to remain solvent. Two days prior, the issue ended the session at $10.47 and fell the following day to $9.38. On the day of the announcement of the offering, burnt investors sent the issue to $8.38.

After ending Thursday’s session at $8.50, today marks the first time the issue has traded over the offering price since June 17.

Questionable Timing Of Good News: Late Thursday, with the issue already firmly in the green, a report that raw steel production in the U.S. was rising, coupled with the recent news of the company raising flat-rolled prices, helped put some upward momentum in the issue.

It had one of its best days in months on much heavier than average volume, rallying from $7.76 to $8.41.

Stoking The Fire Of The Rally: Before today's open, the company announced its third-quarter loss could be less than expected. The company also announced a plan to repay $900 million of US ABL by the end of the quarter. Good news on back-to-back days has nudged the issue over $9 for the first time since the day preceding the offering.

Price Action During The Show: When the issue was being discussed on the show, it was trading at $8.70. The author of this article noted upside if it was able to clear the price of the June offering ($8.58). Once it cleared that level, it was likely it would fill the gap (or void in price) up to $9.26, created when the issue opened sharply lower on June 18 following the offering announcement.

Price Action Of The Open: After a flat open, it had a brief dip to $8.36 and missed the aforementioned resistance level by one penny only reaching $9.25 and revered course. The ensuing decline has taken the issue into the upper $8 handle.

 

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