Good Response Q: What do you think of the newly public Algoma Steel (trades as ASTL on the NASDAQ) after the recent takeover and name change by Legato? Please comment on risk and upside potential for its shares.
We think it is interesting but prefer STLC within the sector. ASTL's debt is fairly high, and cash flow has been negative. The company's long term history is not great. The main risk is debt, steel prices and economic growth. It is also a new public company and not that big. STLC, meanwhile, is exceptionally cheap on valuation, recently doubled its dividend, is debt free with $100M cash, and is subject to the same influences and risks.
So said the team at 5iResearch late last week. GLTA