United States Steel Corporation (NYSE:X) attempted to set support at $24 three weeks ago. The stock has since tested the support. The share is now trading at $19.24 as bears press harder. We ask how much lower the stock could fall.
Our analysis shows that the decline in the price of United States Steel Corporation shares is irrational. The company is now trading at a PE of 1.16. Though the company faces competition in the steel industry, earnings remain strong. The decline in the price of shares is therefore not a reflection of the company’s fundamental value.
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United States Steel could still decline to $18. Analysis shows that the 200-day average is at $18.32 and is the lowest of the moving averages. If the stock were to decline any further, then it would pivot at this level.
In the medium to long-term, the stock will consolidate between $20 and $26. This week’s price chart shows today’s price as the lowest price. The highest was $21.50. It shows the stock is likely to establish support at this level.
Despite the price movements, we still consider United States Steel a buy at the current price levels. The low PE coupled with expectations of EPS growth indicates it is an attractive value stock.
United States Steel declines to create buying opportunities
United States Steel is trading just above the 200-day average of $18.32. The 10-day average just interacted with the 50-day. Consolidation is expected between $20 and $26. Therefore, we wait to see whether the stock will pivot at the current level.
Summary
This analysis still recommends buying United States Steel Corporation. The PE of 1.16 makes the stock highly attractive. The company has great upside potential. It is currently suffering from bear market pressures.
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