4-Star Stocks Poised to Pop: Olympic Steel

Based on the aggregated intelligence of 130,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, steelmaking small cap Olympic Steel (Nasdaq: ZEUS  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Olympic's business, and see what CAPS investors are saying about the stock right now.

Olympic facts 

Headquarters (founded)

Bedford Heights, Ohio (1954)

Market Cap

$215.92 million

Industry

Steel

Trailing-12-Month Revenue

$1.23 billion

Management

Chairman/CEO Michael Siegal (since 1984)

CFO Richard Marabito (since 2002)

Return on Equity (average, last three years)

15.9%

Dividend Yield

1.0%

Competitors

Reliance Steel & Aluminum (NYSE: RS  )

CAPS members bullish on ZEUS also bullish on

Vale (NYSE: RIO  )

Chesapeake Energy (NYSE: CHK  )

CAPS members bearish on ZEUS also bearish on

AK Steel (NYSE: AKS  )

General Motors (NYSE: GM  )

Citigroup (NYSE: C  )

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS.

Over on CAPS, fully 243 of the 258 members who have rated Olympic -- some 94% -- believe the stock will outperform the S&P 500 going forward. These bulls include BoiseKen and Junkyardhawg1985, both of whom are ranked in the top 15% of our community.

In late February, BoiseKen tapped Olympic as a contrarian way to make some decent income: "Gives me a little yield, selling below book value, priced for death, shall rise!"

In a more recent pitch from last week, Junkyardhawg1985 elaborates on the steely steal:

Olympic Steel (ZEUS) is trading for about 2/3 of net tangible assets, a trailing P/E of 3 and a enterprise value to revenue ratio of 0.2. They will take a $30 million hit on earnings for inventory write down, but they will be generating plenty of cash with the inventory reduction. This should help them weather the economic downturn and get them to a much higher valuation after the downturn.

What do you think about Olympic Steel, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 130,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Chesapeake is a Motley Fool Inside Value pick. The Fool's disclosure policy always gets a perfect score.


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