US steel penny stocks have benefitted in many ways from the trade war.
To recap, the US imposed a 25% tariff on steel and aluminum imports in May. The idea was to enhance the US’s own economy by encouraging business from within. Of course, nothing is ever straight-forward, and a full-blown trade war ensued. China and America have played tit-for-tat on import tariffs ever since.
Penny Stocks Benefitting
But for American steel, the tariffs have increased business. Penny stocks company Gerdau SA (NYSE:GGB) is an example. Gerdau is a Brazilian steelmaker with significant operations in the US; as such, it is exempt from the increased import taxes.
Benefitting
Simply put, the company’s bottom line has benefitted from import tariffs on metal.
For example, in recent quarters, Gerdau SA has experienced higher revenue from its US plants than from its plants in Brazil. This is simply down to Trump’s tariffs making the supply of steel within the US rather limited. As a result, the price of the metal has soared.
It’s straightforward business math really. In fact, Gerdau’s US operations accounted for 42% of the company’s global revenue, despite the company actually selling 6% less steel than in 2017.
And so far the GGB penny stock has risen 25% in 2018.
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Investors
At the current selling price of $4.10 USD, GGB stock is inviting. The reason is not just an expanding bottom line. The company says it will “be distributing 30% of its profits in 2018 as dividends, but it might revise that figure for 2019 […] whatever the revision, the amount distributed to shareholders would likely be higher than in 2018.”
Further, Gerdau was not shy about its positive year:
“In North America, we had the best spread in years in 2018 and next year we expect the spread to remain high.“
So looking ahead, this penny stock is worth watching. If the business moves as it has, then increases can be expected.
Featured Image: Depositphotos/© zhudifeng
