2019 was not a great year for Nucor (NYSE:NUE) investors.

On the one hand, yes, Nucor stock is up 8.5% for the year as we enter the home stretch of 2019. On the other hand, the S&P 500 as a whole is up 24% -- nearly three times Nucor's gain. And Nucor stock is down 8% over the past 52 weeks, down 2% over the past two years, and down 14% over the past three years. All in all, a pretty disappointing conclusion to a year that began with Nucor reporting its most profitable earnings year ever in January (though it was admittedly relating news from 2018).

But what about next year?

That's a very tricky question, and I fear the reason it's so hard to answer lies very much out of Nucor's control. Because for the past three years, the company's fate has been largely tied to the name on the mailbox at 1600 Pennsylvania Avenue.

Molten steel pours in a foundry

Image source: Getty Images.

Lessons from history

Think back with me, if you will, to November 2016. Donald J. Trump has just won an upset victory in the 2016 presidential election. And part of his campaign platform was a promise to spend "$1 trillion ... to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We're going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it."

Thanks in large part to that promise -- and to the election victory that meant he would have a chance to deliver on it -- shares of America's "infrastructure" stocks surged, with Nucor stock in particular jumping 26% in the month of November 2016 alone.

But what happened next? I'll give you a hint: It's 2019 now, and that infrastructure bill that President Trump promised to bring forth back in 2016 still hasn't seen the light of day. Instead, what help Washington has managed to give Nucor centered more on a reduction in tax rates, and an increase in tariffs on imported steel.

Second verse -- not the same as the first

No disrespect to Nucor -- which I've long argued is a great business and a superb stock to own for the long-term -- but there's just no getting around the fact that the "most profitable earnings year ever" for Nucor, 2018, coincided with the implementation of tax reform signed into law in December 2017, and also the levying of heavy tariffs on imported steel in March 2018. And with the tailwinds from those twin developments beginning to wane, Nucor's profit plummeted 32% year over year through the first nine months of this year (per data from S&P Global Market Intelligence).

Now what are the chances of those tailwinds picking back up again in 2020?

Let's consider the possibilities. For the next 11 long, long months, America in general, and Washington, D.C. in particular, will be mired in a distracting presidential impeachment process. Simultaneously, more than a dozen Democratic challengers, and a handful of Republicans, are hoping to replace President Trump in the White House.

 Suffice it to say that this isn't an environment conducive to passing any more tax breaks for the steel industry. On the plus side (for Nucor), however, the president did just announce plans to levy a new 25% tariff on steel imports from a couple of countries -- Brazil and Argentina, to be precise. But then again, the president is also trying to cool off tensions with China, and forge a truce in his long-running trade war with that country. 

When you consider that China is the world's largest steel producing nation, churning out as much as 800 million metric tons of the stuff annually, while Brazil is only No. 9 (30 million tons) -- and Argentina doesn't even break into the top 10 -- I think it's obvious that the odds favor overall steel tariffs becoming less protective of Nucor in the near future, not more. 

And that doesn't bode well for a return to 2018's record profits in 2020.

What's good about Nucor

Now, does all this mean that you should write Nucor's stock off your shopping list forever?

Not at all. In fact, at a current valuation of less than 10 times earnings, with a modest debt load ($2.5 billion net of cash, versus a market cap nearly 7x that), an above-average dividend yield of 2.8%, and the prospect of at least modest 5% long-term earnings growth rates (again, per S&P Global data), I'd argue that Nucor stock remains a fine company, and has the potential to become a rewarding investment at some point.

All I would advise is that instead of buying Nucor now, an investor might be better advised to wait and see how the 2020 presidential election shakes out before making a decision. A reelected President Trump might very well revive plans for a trillion-dollar infrastructure initiative, goosing domestic demand for Nucor's steel. And for that matter, even if America elects a new tenant for the White House come November 2020, most analysts who follow Nucor stock are forecasting that next year will be the nadir for earnings at the company, and profits will begin growing again in 2021.

That forecast, by the way, appears to hold true no matter who reigns in Washington going forward -- and for long-term investors, that may be the best news of all.