Fast Money

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Fast Money

No. 3 -  Hot Steel Cooling?

Investors are losing that Nucor smell as the steelmaker’s shares fall 23% on a profit decline – even as the rest of the sector remains on a tear. Nucor CEO Dan DiMicco joins the guys on the Fast Line.

Nucor (NUE) is the second-largest steelmaker in the U.S. DiMicco says the profit loss can be blamed on the weak auto and housing markets. But there isn’t much the company can do to turn around these industries, so it must leverage itself as much as possible to the growth areas, like the global infrastructure boom, that are boosting other steelmakers.

Perhaps Nucor’s biggest problem, DiMicco says, comes from an excess of supply coming out of China. But the company remains “extremely profitable,” especially if you look at what it’s done over the last six years, he says. As for what’s driving the other steel companies higher, DiMicco thinks it has to do with the strong M&A buzz, and Nucor simply isn’t viewed as a takeover target therefore it doesn’t get the kind of speculation that drives up prices.

But Eric Bolling thinks it has little to do with M&A. Global growth is the reason for the bull market in steel. Nucor has an individual problem where “for some reason money flows in and out” of it and, in turn, “throws the stock price around.” Eric can’t understand why Nucor is the only name with such volatility, as other steel companies like Posco (PKX) and U.S. Steel (X) continue to clip higher.

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Trader disclosure: On July 19th 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC); Bolling Owns (NMX), Copper, Gold, Silver, Platinum; Bolling Is Short (FXI) And Owns (FXI) Puts; Seymour Owns (ABV), (AAPL), (GLD), (INTC), (MSFT), (SBUX), (TIE), Macke Writes For Financial Education Website, CNBC Is A Service Of NBC Universal And Dow Jones