Luxembourg-based steel stock Tenaris ties Steel Dynamics for top billing in IBD Stock Checkup. Both companies earn 96 Composite Ratings, meaning they're outpacing 96% of all stocks in terms of key stock-picking factors.
Although Tenaris did not join Steel Dynamics and Reliance Steel on this month's list of new buys by the best mutual funds, 22 funds with an A+ rating own shares in TS stock.
Also pointing to strong institutional demand, Tenaris has seen three quarters of rising fund ownership. And, in a sign of rebounding technical strength, the 50-day moving average has climbed back above the longer-term 200-day line.
Coupled with the steel stock's impressive sales and earnings growth, this buying pressure and bullish chart action have earned Tenaris a spot on the IBD 50 and IBD Leaderboard.
Tenaris Expanding In U.S. And Middle East
Tenaris is a leading manufacturer of pipes and related services for the world's energy industry and other industrial sectors. It also supply pipes and tubular components for low-carbon energy uses.
It controls almost half of the world market and is the largest provider of steel tubing used to construct oil and gas wells.
The Tenaris manufacturing system integrates steelmaking, pipe rolling and forming, heat treatment, threading and finishing across 16 countries. It is also pursuing capacity expansions in North America and the Middle East.
In July, it announced the acquisition of Benteler Steel & Tube Manufacturing Corp. from parent Benteler North America, in a deal valued at $460 million.
Through its Rig Direct system, customers can place orders, track shipments and deliveries, manage rig returns and access invoices, mill test certificates and bills of lading, all on one digital platform.
Analysts Forecast 126% Earnings Growth
Tenaris generated 84% earnings growth last quarter, bringing its average gains over the last three quarters to 191%. With Q4 growth estimates of 90%, analysts now expect full-year EPS to grow a lofty 123%.
However, this vertical trajectory isn't expected to last, with the same folks forecasting that growth will slump to just 7% next year.
Revenue gains have also been strong since a rebound started in the second half of last year. Over the last five quarters, sales growth has ranged from 23% to 100%. In Q3, Tenaris posted a 70% year-over-year rise to just under $3 billion.
The company sports an A SMR Rating, which tracks sales growth, profit margins and return on equity.
Tenaris Tests Mettle Of Breakout Move
Tenaris formed a cup with handle and broke past a 34.19 buy point on Nov. 15, but the rally failed after just three sessions.
The stock gapped down to kick off the holiday-shortened week but has now recaptured its 21-day line. TS stock briefly fell more than 8% below the buy point during the decline, before reversing back above it.
Volume in the upside reversal was strong on a 30-minute chart in the second half of the session all the way through the close, helping to mitigate Monday's red (down) spike in volume.
Since mid-October, daily volume on the upside has mostly been higher than on down days — a sign of demand.
Look for that trend to continue as Tenaris shores up its chart. Also see if the relative strength line can continue its powerful rise off an August bottom and retake the high it hit on the earlier breakout.
Meanwhile, Steel Dynamics is now extended, with its RS line at a new high, while Reliance Steel is testing a new buy point.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
