Earnings surprise....this should be a big one

[Hydroblunt]

Quote from HolyGrail:

Hydro I just want to say one thing. I agree with most of your posts but you are just plain wrong on the speculation. This is a small industry and if there was a specualtive buy on RS I would have heard about it long ago. I think you are mixing up the possible speculative buy of X (us steel).

I need to correct myself, I was talking about OS. They both trade similiar (like sh*t), think that's why I got confused. And this was a year ago, but the notion lasted for months and months. Looks like the hedgies are still waiting for that offer.

BTW, the conference call was not that good, they are lowering guidance. In comparison to $STQ, RS sucked today, was my biggest loss and only steel loss. I'm figuring out that this stock sucks for intraday.

One of the cheaper steels/aluminums out there.

 

[HolyGrail]

I heard the conference call and it was great. They kept their original guidance which is the "smart thing to do". They are going to lose profit only because of a high lifo charge. All that does is lower their tax burden, nothing else. They will still most likely blow out the numbers in the 4th quarter. Hell, this is the 19th of October and my sales are already 90% of September which was a record for my company. They should have similar results. I will probably scale out of most my position before they report, but I will come back to this thread to let everyone know if my company had a great 4th quarter. 4th quarters are weird in our industry. 98% of the time it is the worst quarter of the year, but then you have that 1.5% of the time where it is actually the best quarter of the year. This looks like one of those quarters.

I agree this is not a good day trading stock with the exception of today where it has had a great range. It's a good swing trade up to 48.

 

[Hydroblunt]

Quote from HolyGrail:

I agree this is not a good day trading stock with the exception of today where it has had a great range. It's a good swing trade up to 48.

RS trades like a stock doing 100k-200k daily volume, when it does about a million a day. You can see liquidity dissapear for 30 cents sometimes, that's why I say it trades like sh*t.

BTW, I can tell you're not too keen on steel sector mechanics. RS had some serious sellers in the morning, because even the $STQ rip could not lift that stock. Something to think about.

You're too optimistic on it. Only reason it is even up today is because of the arbitrage players. RS usually lags but not that badly.

 

[HolyGrail]

Quote from Hydroblunt:


You're too optimistic on it. Only reason it is even up today is because of the arbitrage players. RS usually lags but not that badly.

You may be right about my optimism, but barring a major market correction I think I can get at least 40.00 out of the stock.

 

[Hydroblunt]

Quote from HolyGrail:

You may be right about my optimism, but barring a major market correction I think I can get at least 40.00 out of the stock.

I don't doubt it, but that is because I think $STQ will continue a long term uptrend. You simply cannot discount the fact that RS is part of the steel producer index. If $STQ starts getting run down by hedge funds, don't expect RS to hold up well.

Which makes for an interesting scenario. If the fundamentals are that strong, the $STQ is holding RS down, at least the way it's been trading. That makes RS a great buyout opportunity.

 

[HolyGrail]

What I found interesting listening to the conference call was that the analysts covering the stock suggested they should take the company private because the stock was too cheap for the growth rate and overall performance.

Also before the split there were two people pretty high up in the organization that actually quit the company so they could sell their stock when the price was in the 90's.

I am optimistic, but I DO KNOW FOR SURE that when the steel market gets back to normal this will probably be a twenty dollar stock or less.

 

[yak merchant]

Quote from HolyGrail:

What I found interesting listening to the conference call was that the analysts covering the stock suggested they should take the company private because the stock was too cheap for the growth rate and overall performance.

Also before the split there were two people pretty high up in the organization that actually quit the company so they could sell their stock when the price was in the 90's.

I am optimistic, but I DO KNOW FOR SURE that when the steel market gets back to normal this will probably be a twenty dollar stock or less.

I'm confused. Maybe I'm an r-tard. But you say your optimistic about it hitting 40. And now you say when every thing get's back to normal it'll be below 20? So short term your bullish but long term, you think it'll go down 50%?

 

[HolyGrail]

Quote from yak merchant:

I'm confused. Maybe I'm an r-tard. But you say your optimistic about it hitting 40. And now you say when every thing get's back to normal it'll be below 20? So short term your bullish but long term, you think it'll go down 50%?

I will know when it will go down drastically from my own business perspective. Reliance sells a lot of stainless steel. Stainless steel has a base price PLUS a surcharge on Nickel. Nickel is selling more than 6.5 times its normal price. Stainless steel is selling for 2.5 its normal price. Carbon steel is selling for 2.5 to 3 times its normal price. There is no way they can't keep making increasing profits as long as these numbers don't go down. When they do, all hell will break loose. Some believe because of china and india steel will not have a slowdown for 5-7 more years. Personally I just don't believe it. This is the longest bull run for steel in my 34 years in the business.

 

[Hydroblunt]

Quote from HolyGrail:

I will know when it will go down drastically from my own business perspective. Reliance sells a lot of stainless steel. Stainless steel has a base price PLUS a surcharge on Nickel. Nickel is selling more than 6.5 times its normal price. Stainless steel is selling for 2.5 its normal price. Carbon steel is selling for 2.5 to 3 times its normal price. There is no way they can't keep making increasing profits as long as these numbers don't go down. When they do, all hell will break loose. Some believe because of china and india steel will not have a slowdown for 5-7 more years. Personally I just don't believe it. This is the longest bull run for steel in my 34 years in the business.

Hehe but you are missing one key point. You are quoting your prices in US$. Prices in supermarkets for regular ole food have increased 2-3 times, some 7-8 over the last 10-15 years. It's not just your industry.

Also, China & India (as well as a couple other nations not heavily publicized in US media) have changed the supply & demand picture. It's not gonna keep growing but it's not just gonna dissapear out of nowhere either.

 

[HolyGrail]

Quote from Hydroblunt:

It's not gonna keep growing but it's not just gonna dissapear out of nowhere either.

True, but steel seems to move from one extreme to another. Between 1999-2002 stainless steel dropped from 1.20 lb to .57. This was an unprecedented drop. The .57 has not been seen in my entire career(34 years).

Now it has gone from that .57 all the way up to 2.00 lb. The 2.00 is another unprecedented number.

For the first 28 years I was in the business you would get 1 good year out of steel, one terrible year, and three mediocre years every 5 years. Now we are getting longer periods of time between extremes. I'm in the process of selling my business, but to be honest, if I knew for sure we were going to have 4 or 5 more years at close to these levels there is no way I would sell.