Is Nucor Stock a Buy?
The world needs steel. It's a vital input into everything from cars to buildings. But all steel companies are not made the same. U.S. steel giant Nucor (NYSE: NUE) has positioned itself at the head of the industry, and might just be one of the best steelmakers on Earth. But is it a buy?
The core of Nucor's business is its collection of 25 electric arc mini-mills. These facilities are smaller and more nimble than older blast furnace technology used to make primary steel. Not only do they make heavy use of recycled scrap metal, but they are, to simplify things greatly, easier to ramp up and down with demand.
Blast furnaces can be highly profitable when running full bore, but they quickly turn unprofitable when demand cools off and they are run below optimum levels. And they require material amounts of iron ore and coal, which aren't quite as environmentally friendly as the scrap and electricity at the core of electric arc mills.
Source Fool.com
