Buy Russel, hold on to Stuart Olson

Article Excerpt

RUSSEL METALS $25.04 (Toronto symbol RUS; TSINetwork Rating: Extra Risk) (905-819-7777;; Shares outstanding: 62.1 million; Market cap: $1.6 billion; Dividend yield: 6.1%) is one of North America’s largest metal distributors. It serves over 28,000 clients at 51 locations in Canada and 12 in the U.S. In the three months ended June 30, 2018, revenue rose 19.8%, to $978.2 million from $816.5 million a year earlier. The gain came from higher shipments and selling prices. Earnings in the quarter were $66.1 million, or $1.07 a share. That’s a 103.5% increase from the $32.5 million, or $0.52 a share, a year earlier. The company benefitted from rising steel prices; they increased the value of Russel’s inventory and its profit margins. Trump’s steel tariffs don’t affect Russell The Trump administration has imposed tariffs of 25% on steel imported into the U.S. However, Russel is a steel distributor, rather than a producer. It also processes that alloy into products according to customer specifications. The company generates about 30% of its…

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