John Dorfman likes to buy good companies when they are down, and that is one of my favorite strategies as well. He is recommending four in this article, and the one I like best is Commercial Metals (CMC), a growth stock selling in deep value terrirory. Dorfman says, ” Commercial Metals has turned a profit at least 19 years in a row, which is as far back as I can search in my Bloomberg earnings database. The Irving, Texas-based company smelts, recycles and trades a variety of metals, as well as chemicals and other industrial materials. At 8 times earnings and 0.34 times revenue I believe it represents good value.” My research shows the company manufactures, recycles, markets, and distributes steel and metal products, in the US and internationally. They operate four steel minimills and a copper tube minimill. They also manufacture rebar, wire rod, and merchant bar in central Europe; in addition, CMC operates steel reinforcing bar fabrication facilities from 11 locations in the US. The company also recycles and processes secondary metals including aluminum, brass, bronze, copper, and lead. Further, CMC engages in metals trading. I also discovered that Commercial Metals ranks 13 on Fortune’s 100 fastest growing companies list. Finally, note that CMC yields 1.18% and the dividend history looks promising.
Dorfman warns, “In the fourth quarter of each year, stocks that have declined often get kicked while they are down, as investors dump their losers in year-end tax selling. For this reason, if you are intrigued by some of the stocks I suggested, I recommend buying half your position now, and the other half around Christmas.” But for me, in view of CMC’s extremely high beta of 2.77, it would be prudent to wait and buy only if a further decline does develop later in the fourth quarter. CMC could be a great investment for the long haul, if obtained at the right price.