Despite my inclination to believe that apocalypse is upon the steel industry, it doesn't mean that investors can't still find opportunities to invest there. On the heels of a tremendous run-up in 2004 and the beginning of 2005, many steel companies sport sky-high valuations in comparison to their industry, even after the haircut they received over the past month or so.
For example, AK Steel
Last year, the company bought some assets from competitor Worthington Industries
While consolidating aspects of the industry under its aegis may be good for its future profitability -- profits grew 1600% last year -- Nucor must also be careful to not pay too much for the companies it is buying as they are also enjoying increased profits and higher price tags. With analysts expecting Nucor's earnings to fall about 30% in 2005, other companies might experience similar declines and could become even more attractively priced.
Nucor is an industry leader with smart leadership making intelligent acquisitions, and it happens to be trading at a price some 20% off its 52-week highs. The government's decision to extend some ill-advised anti-dumping duties on foreign steel manufacturers -- policies Nucor obviously supports -- may create an environment for the company to continue earning handsome profits. It may also avoid the stampede of the Four Horsemen of the Apocalypse and reward investors accordingly.
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Fool contributor Rich Duprey does not own any of the stocks mentioned in the article.