CNBC’s Jim Cramer stated Wednesday he stays bullish on Nucor, even after the steel maker– among his preferred stocks in current months– was reduced by Goldman Sachs.
“When best of breed stocks get downgraded, you should use that weakness to do some buying, not selling. You rarely get this opportunity,” stated the “Mad Money” host, whose charitable trust owns the stock. “Nucor’s a world-class American manufacturer that rarely gets put on sale — do not look a gift horse in the mouth.”
Shares of North Carolina- based Nucor fell 2.75% in Wednesday’s session, closing at $9599 each. That puts the stock down about 25% from its 52- week high of $12881 onAug 13.
The decrease followed a Goldman expert cut its cost target on Nucor to $108 per share from $123, while moving the stock to a neutral ranking from a buy. U.S. Steel was likewise reduced. In a note to customers, Goldman expert Emily Chieng stated traditionally high steel rates might reverse course.
Cramer stated he comprehends the reasoning behind the call since the expert anticipates a pullback in steel rates.
“It’s simply that what I believe they’re incorrect about [is] the decrease is not going to occur the method they believe.–There are lots of reasons that steel rates might stay totally resistant,” Cramer stated. “The biggest reason? Demand. There’s tremendous demand for steel,” he stated, pointing the automobile market as possible source of development.
“Plus, if Congress ever passes this infrastructure bill, Wall Street will go crazy for the steel stocks,” included Cramer.
The “Mad Money” host likewise stated Nucor’s management group in the middle of a stock buyback program, that included the buying of shares last quarter when they sold the mid-$100 s. “You could argue that was bad timing given that it’s now in the mid-$90s, but I bet they keep buying back their own stock rapaciously now that it’s down ten bucks from those levels and they have so much cash,” he stated.
Disclosure: Cramer’s charitable trust owns shares of Nucor.
Sign up here for the brand-new CNBC Investing Club newsletter to follow Jim Cramer’s every relocation in the marketplace, provided straight in your inbox.
