RUSSEL METALS $24.16 - Toronto symbol RUS

RUSSEL METALS $24.16 (Toronto symbol RUS; TSINetwork Rating: Speculative)(905- 819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $1.5 billion; Dividend yield: 6.3%) reported stronger results in the latest quarter.

In the three months ended December 31, 2014, Russel’s revenue rose 24.9%, to $1.01 billion from $811.1 million a year earlier.

Earnings gained 36.4%, to $31.1 million, or $0.50 a share. A year earlier, the company earned $22.8 million, or $0.37. Russel has invested in new plants and processing equipment in the past three years, which has cut its costs and improved its efficiency. That’s paying off with higher profit margins.

Russel holds cash of $53.4 million, or $0.87 a share. Its long-term debt of $460.5 million is a reasonable 31% of its market cap. The shares yield a high 6.3%.

The company gets about 35% of its revenue from customers in the oil and gas drilling industry. That, plus its exposure to fluctuating steel prices, adds risk. However, Russel’s long-term outlook remains positive, and it is well positioned to gain as the economy recovers.

Russel Metals is still a buy.

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