Cramer is sticking with Nucor after Goldman downgrade, says the steel maker’s stock is ‘on sale’
- CNBC's Jim Cramer said Wednesday he remains bullish on Nucor, even after Goldman Sachs downgraded the steel maker's stock.
- The "Mad Money" host said he believes demand for steel remains high and Nucor's buyback program also is a positive.
CNBC's Jim Cramer said Wednesday he remains bullish on Nucor, even after the steel maker — one of his favorite stocks in recent months — was downgraded by Goldman Sachs.
"When best of breed stocks get downgraded, you should use that weakness to do some buying, not selling. You rarely get this opportunity," said the "Mad Money" host, whose charitable trust owns the stock. "Nucor's a world-class American manufacturer that rarely gets put on sale — do not look a gift horse in the mouth."
Shares of North Carolina-based Nucor fell 2.75% in Wednesday's session, closing at $95.99 apiece. That puts the stock down about 25% from its 52-week high of $128.81 on Aug. 13.
The decline came after a Goldman analyst cut its price target on Nucor to $108 per share from $123, while moving the stock to a neutral rating from a buy. U.S. Steel was similarly downgraded. In a note to clients, Goldman analyst Emily Chieng said historically high steel prices could reverse course.
Cramer said he understands the rationale behind the call because the analyst expects a pullback in steel prices.
"It's just that what I think they're wrong about [is] the decline is not going to happen the way they think.—There are many reasons why steel prices could remain completely resilient," Cramer said. "The biggest reason? Demand. There's tremendous demand for steel," he said, pointing the auto industry as potential source of growth.
"Plus, if Congress ever passes this infrastructure bill, Wall Street will go crazy for the steel stocks," added Cramer.
The "Mad Money" host also said Nucor's management team in the midst of a stock buyback program, which included the repurchasing of shares last quarter when they traded in the mid-$100s. "You could argue that was bad timing given that it's now in the mid-$90s, but I bet they keep buying back their own stock rapaciously now that it's down ten bucks from those levels and they have so much cash," he said.
Disclosure: Cramer's charitable trust owns shares of Nucor.
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