Blazing Profits

Recently sporting a market value of $17.4 billion, Nucor (NYSE: NUE) is America’s largest steel producer and North America’s largest recycler of steel. The use of electric arc furnaces and mini-mills has helped fuel its success, and it’s known for avoiding layoffs, too. Built on a solid financial foundation, Nucor has posted profits in many tough years when peers posted losses.

Nucor likes to get stronger during industry downturns, when bargains abound. Since 2009, it has built a direct reduced iron ore facility to help ensure it has access to lowcost steel for its mills. It has also acquired steel foundation distributor Skyline Steel, flatrolled steel mill Gallatin Steel, two cold finished bar mills, a plate mill, and three pipe and tube mills. Nucor also expanded operations at multiple facilities, and it’s building a new mill in Canada and another through a joint venture in Mexico.

Nucor’s business is exposed to many risks, including a general economic downturn and the potential for a flood of imports that would drive steel prices down. Yet management has executed well through such environments in the past.

The company’s track record of allocating resources between managing capacity and expanding into more favorable market niches has allowed Nucor to increase its dividend annually for more than 40 years. Its payout recently yielded 2.7 percent. (The Motley Fool has recommended Nucor.).