If you're interested in companies that have histories of success, treat shareholders fairly and honestly, and are proven competitive leaders in their industries, look no further than American steel producer Nucor
Founded in 1940 and based in Charlotte, N.C., Nucor is one of the largest steel manufacturers in North America. The company recently posted third-quarter earnings of $23.5 million and a 30% increase in sales, even as a bad economic cycle and inefficient manufacturing have left its major competitors bleeding red ink.
Nucor is not only a recommendation of our flagship product, Motley Fool Stock Advisor, but it was also the first buy recommendation for my public, real-money portfolio. Check out my recommendation, then keep reading here to see how you can get involved in our upcoming live chat with Nucor CEO Dan DiMicco.
The quick synopsis
Nucor became the nation's top steel producer by pioneering a new type of production in the late 1960s. Its minimills employ electric furnaces that are cheaper to run than the typical blast furnaces. In addition, they use scrap metal instead of the pricier pig iron as a source material. This gives Nucor's mills a leg up against competitors, providing the company with a lower break-even point. It also allows Nucor to adjust capacity production much more flexibly than other steel producers, which is essential during the type of downturn we're currently experiencing.
The company's culture has been widely touted because of its lack of hierarchy -- there are less than five layers of management from front-line employees to DiMicco, who's been CEO since September 2000 – and the ability of everyday workers to drive the decision-making process. That company culture has not only benefitted workers, but also shareholders. Nucor pays a nice 3.5% dividend and has been shelling out payments since 1973 -- a great way to increase stockholders' wealth over the long-term.
Just look at how you would have fared if you were a Nucor shareholder, versus a shareholder of another steel producer or an investor in the general market:
|
Investment |
5-Year Compound Annual Growth Rate |
10-Year Compound Annual Growth Rate |
|---|---|---|
| S&P 500 | (0.5%) | (0.8%) |
| Nucor | 9% | 18.6% |
|
United States Steel |
3.8% | 14.1% |
|
AK Steel Holding |
14.6% | 5.4% |
|
Commercial Metals Company |
0.5% | 20.7% |
Although Nucor is primarily a domestic steel producer, it should still benefit from the buildout of emerging markets over the next few decades. Management has said that it expects international exports to increase from 11% of sales last year to 15% this year, which will inevitably pit Nucor against foreign producers such as POSCO
How you can get involved
At the Motley Fool, we strongly believe that an honest and seasoned management team is as important as any other element in a company's success. While this metric is harder to gauge than most, good old fashioned conversation provides a tried-and-true test. That's why we've invited DiMicco to chat online with us this upcoming Thursday, from 2 p.m. to 3 p.m. ET. We're truly excited, and we hope to tee up some great questions -- which is why we're inviting you to get involved.
Feel free to hop online on Thursday and follow the conversation or ask questions. If you can't make it, feel free to leave potential questions in the comments section below. I'll follow up with another article giving you insight not only into Nucor's future, but also that of the steel industry in general.
Fire away with your questions! Given all his experience with steel mills, we're fairly certain that DiMicco can take the heat.
