Top 10 Diversified Bank Stocks To Buy For 2016

Top 10 Diversified Bank Stocks To Buy For 2016: Gerdau SA (GGB)

Gerdau S.A. (Gerdau), incorporated on November 20, 1961, is a producer of long rolled steel. Gerdau operates steel mills that produce steel by direct iron-ore reduction (DRI) in blast furnaces and in electric arc furnaces (EAF). In Brazil, the Company operates four integrated steel mills, including its mill, Acominas mill, an integrated steel mill located in the state of Minas Gerais. It has a total of 60 steel producing units globally, including joint ventures and associate companies. The joint ventures include a unit located in the United States for the production of flat rolled steel and another unit in India. The associate companies are Aceros Corsa in Mexico; Corporacion Centroamericana del Acero in Guatemala, and Industrias Nacionales (INCA) in the Dominican Republic. Through its subsidiaries and affiliates, the Company also engages in other activities related to the production and sale of steel products, including reforestation, electric power generation projects; c oking coal, iron ore and pig iron production, as well as fab shops and downstream operations. On August 12, 2010, Gerdau acquired the remaining 49.1% interest in the Cleary Holdings Corp. On October 21, 2010, Gerdau, through its wholly owned subsidiary Gerdau Ameristeel acquired TAMCO Steel.

Gerdau offers a range of steel products, which are manufactured according to a variety of customer specifications. Its product mix includes crude steel (slabs, blooms and billets) sold to rolling mills, finished products for the construction industry, such as rods and structural bars, finished products for industry, such as commercial rolled steel bars and machine wire and products for farming and agriculture, such as poles, smooth wire and barbed wire. The Company also produces specialty steel products utilizing technology and normally with a certain degree of cus! tomization for the manufacture of tools and machinery, chains, locks and springs, for the automotive and mechan ical industries. As of December 31, 2010, the Company operat! ed 19 steel production units in the United States and Canada through its principal entity, Gerdau Ameristeel Corporation. Gerdau operates in four business segments: Brazil (Brazil Business Operation), includes Brazil's operations, except specialty steel; North America (North America Business Operation), includes all North American operations, except Mexico and specialty steel; Latin America (Latin America Business Operation), includes all Latin American operations, except for Brazil, and Specialty Steel (Specialty Steel Business Operation), includes the specialty steel operations in Brazil, Spain and the United States.

Crude Steel (Billets, Blooms and Slabs)

Crude steel products include billets, blooms and slabs. Billets are bars from square sections of long steel that serve as inputs for the production of wire rod, rebars and merchant bars. They are the main product of the Acominas mill. Blooms are used to manufacture products, such as springs, f orged parts, heavy structural shapes and seamless tubes. Slabs are used in the steel industry for the rolling of a range of flat rolled products. Slabs are mainly used to produce hot and cold rolled coils, heavy slabs and profiles. Crude steel products are produced using either the continuous casting or conventional process.

Common Long Rolled Products

Common long rolled products represent a major portion of the Company's production. The Company's main long rolled products include rebars, merchant bars and profiles, which are used mainly by the construction and manufacturing industries.

Drawn Products

Drawn products include barbed and barbless fence wire, galvanized wire, fences, concrete reinforcing wire mesh, nails and clamps. These products are not exported and are sold to the manufacturing, construc! tion and ! agricultural industries.

Specialty Steel Products

Gerdau produces specialty and st ainless steel used in tools and machinery, chains, fasteners! , railroa! d spikes and special coil steel at its Acos Villares and Piratini units in Brazil, at Corporacion Sidenor units in Spain and at the MacSteel units in the United States. In the United States, Gerdau Ameristeel produces special sections, such as grader blades, smelter bars, light rails, super light I-beams, elevator guide rails and other products that are made on demand for the Company's clients, which are mainly manufacturers. It is a joint venture with the Kalyani Group in India, in which Gerdau has a 73.2% interest in the joint venture.

Flat Products

Gerdau's Acominas mill produces slabs, which are rolled into flat products, such as hot and cold steel coils, heavy plates and profiles. In addition, the Company's distribution subsidiary, Comercial Gerdau, resells flat steel products manufactured by other Brazilian steel producers. Gerdau Ameristeel also supplies flat steel to its customers through its joint venture Gallatin located in Kentucky . Gallatin is a joint venture with ArcelorMittal, Canada, a flat steel producer, and has nominal installed capacity of 1.4 million tons of flat steel per year.

The Company competes with Commercial Metals Company, Nucor Corporation, Steel Dynamics Inc., ArcelorMittal Inc., ArcelorMittal Brasil, Usiminas Group and CSN.

Advisors' Opinion:

• [By Jonas Elmerraji]

   

  Up first is Brazilian steel stock Gerdau (GGB) a name that's been one of the NYSE's worst large-cap performers this year. Since the start of January, Gerdau is down more than 29%. Truth be told, GGB has been looking bearish for a while now. If you'd sold it the last time it looked toxic, you'd have spared yourself close to 11% losses.

  But shares look primed for another leg lower from here -- and Gerdau is worth an updated ! look toda! y.

  GGB spent most of 2014 forming a bearish descending triangle pattern. The descending triangle is a price pattern that's formed by horizontal support below shares (in this case at $5.75) and downtrending resistance to the topside. As GGB bounced in between those two technically important levels, it was getting squeezed closer and closer to a breakdown below that $5.75 price floor. That sell trigger happened on Tuesday.

  That means that if you own GGB, it's time to unload this stock.

  That bearish bet is being confirmed by relative strength in GGB. This stock's relative strength line has been downtrend all year long, an indication that Gerdau is underperforming the rest of the market. That's a big red flag to heed in shares this week.

  Read More: 3 Stocks Spiking on Big Volume

• [By Victor Selva] -largest producer in the sector.

  Why Not No. 1?

  Brazil-based Gerdau has three main advantages. Size – though it's a strong pro – is not necessarily one of them. To start with, Gerdau is a highly integrated company, with annual iron ore production capacity totaling 11.5 million metric tons, enabling it to be over 80% and 40% self-sufficient in Brazil and the U.S., respectively, and thus hedging itself from volatility in raw material prices.

  Second, the company has a relatively modern fleet of furnaces, mainly composed of electric arc furnaces (EAFs), which are more energy-efficient than traditional blast furnaces and should result on a more flexible supply.

  Last, the location is also a positive factor: with a high geographical diversification, Gerdau has still managed to maintain a strong leadership in the markets where it operates (particularly in Brazil and the U.S.). This allows it, on the one hand, to supply many different markets and therefore reduce risks of local economic underperformances and, on the other hand, to profit from low-cost labor in Brazil. In addition, the upcoming sporting events – 2014 World Cup and 2! 016 Olymp! ics – are expected to generate a strong inflow of investments in infrastructure in the country, with Gerdau as a potential beneficiary of this.

  In spite of being the biggest worldwide, I believe that ArcelorMittal doesn't count with these characteristics. Further, as players in the industry are so atomized, being the No. 1 producer implies having only 6% of the global market share, which doesn't give ArcelorMittal a superior bargain power than its peers. And though it's still a very diversified and vertically integrated group, its costs will tend to be higher than those of Gerdau, since its furnaces are primarily blast furnaces and its labor expenses are higher as the company is based in Europe.

  US Steel will also have to deal with an old and inefficient fleet of furnaces, w

• [By Jeff Reeves]

  Gerdau (GGB) is one of the best ways to play this trend if you believe in a commodities shift. The Brazilian steel company trades for a forward P/E of about 5, and a price/sales of just a bit more than 0.7. That's an incredible valuation.

source from Top Stocks For 2015:http://www.topstocksblog.com/top-10-diversified-bank-stocks-to-buy-for-2016-2.html