The Ironclad Investment Case for Steel

by Trefis Team
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Turn the inherent risk of highly cyclical businesses into buying opportunities. James Berman scours steel producers to find a “Goldilocks” stock with the right fundamentals, the right amount of leverage — and at the cheap end of its cyclical range. Read about this stock in the tenth edition of The Berman Value Folio. Powered by Berman’s keen insight and Trefis’s interactive modelling, the Folio’s portfolio is up 17.8% since inception just nine months ago.

Portfolio Manager James Berman, president and founder of, guides you through his fundamentals driven investment rationale for specific companies. Berman relies on Trefis analysis and modifiable tools to summarize his outlook and invites readers to use these tools to challenge his rationale or create their own views on stocks.

Download the Berman Value Folio

The Ironclad Investment Case for Steel

By James Berman

The market is no longer ripe for the easy picking. If you look at the Trefis Dow valuation on the following page, you’ll see their estimate for fair value at 13,993 — only 3% above the current 13,593. Stocks have come very far, very fast, ascending the wall of multiple worries (Euro collapse, fiscal cliff, etc.) as compelling valuation trumped macro concerns — as it
always does in the end.

Caution should be heeded as stocks climb further. The market is no longer dirt cheap, but many sectors and individual stocks still hide in plain sight, neglected by a public that has forsaken equities at precisely the wrong time.

The following categories of stocks are still ready for harvest based on price-to-cash flow metrics:

  • Homebuilders
  • Financials
  • Europe
  • Japan
  • Large-Cap Value
  • Emerging Asia
  • Industrial Cyclicals

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