Steel ETFs: Getting a Boost from Analyst's Upgrade | ETF Trends

An analyst has upgraded the U.S. steel sector from “neutral” up to “attractive” on a host of factors. There are a variety of exchange traded funds (ETFs) you can use to take advantage of the boost.Goldman Sachs  stock analyst Sal Tharani upgraded the sector Monday to attractive from neutral, and moved the industry into a “conviction buy” list. Scott Eden for TheStreet reports that the analyst made a case for bullishness toward steel because the sector’s share price is “underperforming” relative to the broader market. (Read about the underperforming commodities thus far).

Other reasons cited in the upgrade:

  • Chinese prices are on the upswing, steel inventories remain low and a weak dollar has been deterring steel imports from other countries, giving prices here support
  • Strong demand in 2010 will come from automakers and the U.S. industrial sector
  • Should Chinese steel exports increase, this would put pressure on U.S. steel prices

Recent activity in steel shares have supported Tharani’s theory. Shares of U.S. Steel jumped 4% to $44.83. By 10:00 a.m. EDT, nearly 2.4 million shares had changed hands. Average daily turnover is 11.7 million. (Where are industrial metals going in this market?)

For more stories about steel, visit our steel category.

  • iShares Dow Jones U.S. Basic Materials (NYSEArca: IYM): up 60% year-to-date

  • Market Vectors Steel ETF (NYSEArca: SLX): up 90% year-to-date

  • PowerShares Dynamic Basic Materials (NYSEArca: PYZ): up 40% year-to-date

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.