Buffett Is Buying This Stock

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Buffett Is Buying This Stock

Warren Buffett Is Buying This Us Stock

The record high valuations have made everyone worried about a potential market crash. In fact, the famous Warren Buffett indicator is now at 218% which is a sign that stocks are overvalued.

But despite all of the fears, Warren Buffett is still buying one stock, and it's Nucor (NUE). Given Warren Buffett's investing style, he is likely to hold Nucor (NUE) for the long term.

Nucor (Nue) - A Big Name In Steel Production

Nucor (NUE) is a big name in the US steel production sector and is the biggest firm in the country. They take recycled scrap metal and turn it into quality steel.

By using scrap metal for steel production, Nucor (NUE) has managed to lower its manufacturing costs. This also gives Nucor (NUE) an edge over other US firms operating in the same space.

The US government has imposed a 50% tariff on all imported steel. And since Nucor (NUE) is US-based, it means its products are now more attractive to consumers.

Also, the AI infrastructure and the spending on electrification use a lot of steel. Once again, this means higher demand for the steel made by Nucor (NUE).

Basically, all the numbers clearly show that Nucor (NUE) is in high demand to tap into the higher steel demand. Also, they don't have to worry about tariffs, which means their steel will be more price-competitive.

The forward P/E of Nucor (NUE) is only 12.1, which is also a good sign. It's yet another reason why Buffett has taken an interest in this stock.

But a key risk for Nucor (NUE) is the fact that steel demand is mostly cyclical. So, if the activity in the industrial and construction sectors drops, it will also impact Nucor (NUE).

Also, higher rates can dampen the activity within the industrial and construction sectors. In addition, high inflation is also a valid concern that can impact the steel demand.

Last but not least, a slowdown in AI infrastructure spending could also have a long-lasting impact on Nucor (NUE) stock.

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