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5-Star Stocks Poised to Pop: POSCO

By Brian D. Pacampara, CFA - Updated Apr 6, 2017 at 10:18PM

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Market-trouncing returns could be written in this 4-Star.

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, South Korean steelmaker POSCO (NYSE: PKX) has earned a coveted five-star ranking.

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

POSCO facts

Headquarters (Founded) Seoul, South Korea (1968)
Market Cap $37.7 billion
Industry Steel
Trailing-12-Month Revenue $55.67 billion
Management

CEO Joon-Yang Chung

CFO Jong-Tae Choi

Return on Equity (Average, Past 3 Years) 13.1%
Cash/Debt $6.14 billion / $18.26 billion
Dividend Yield 2.1%
Competitors

ArcelorMittal (NYSE: MT)

U.S. Steel (NYSE: X)

Nucor (NYSE: NUE)

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

On CAPS, 98% of the 975 members who have rated POSCO believe the stock will outperform the S&P 500 going forward. These bulls include PETPOE and All-Star goalie37, who is ranked in the top 15% of our community.

Earlier this year, PETPOE nicely summed up the POSCO bull case: 

One of the best-run steel companies in the world. Located in economic growth area (South Korea). Stock price volatile because of political tensions on peninsula. Dips offer good entry for investors. Should thrive when steel market gets stronger.

Currently, POSCO even boasts a solid debt-to-equity ratio of 0.16. That's lower than that of other steel giants ArcelorMittal (0.3), U.S. Steel (0.9), and Nucor (0.60).

CAPS member goalie37 expands on POSCO as a particularly timely pick:

PKX is a stock I found several years ago. ... Since they had moved to what I considered nose-bleed valuation, they fell off my radar. Fast forward to Spring 2011. Seeing the scope of the disaster in Japan, it seemed to me that rebuilding will require a massive amount of steel. This will make a strong commodity even stronger. I decided to take another look at Posco, and found the stock has returned to a much more logical valuation. I'm giving this an outperform on CAPS, and will be buying with real life money in the near future.

What do you think about POSCO, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

POSCO Stock Quote
POSCO
PKX
$61.35 (3.16%) $1.88
Nucor Corporation Stock Quote
Nucor Corporation
NUE
$110.66 (0.14%) $0.15
United States Steel Corporation Stock Quote
United States Steel Corporation
X
$22.80 (1.02%) $0.23
ArcelorMittal Stock Quote
ArcelorMittal
MT
$28.32 (2.64%) $0.73

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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