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US Steel - treat it as a cyclical company
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i4value
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01-Jun-2023 14:25
Yells: "i4value.asia" |
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I like cyclical companies because you can make repeated money as it cycle through its different stages. The trick is to buy when it is trading below its cycle value and sell when the market price goes above the cycle value. The first step is to verify its cyclical nature. I used US steel to illustrate what I mean. As the same implies, this is a US steel company. The chart below shows the correlation between the company performance and steel prices.  The next step is to carry out a valuation. I do this by looking at the performance over the cycle. The challenge here is that its performance depends not only on steel prices but also its shipment volume. Both are driven by different factors. To account for this, I developed a financial model that considers both factors. Based on this model I found that there is a margin of safety currenlty. So this is an entry opportunity. If you want more info about the company, go to US Steel &ndash a case study on getting insights from annual reports |
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