Daily Stock Pick: Gerdau (GGB)

This week, I'm looking for the sixth basic materials representative of nine for my Ivy portfolio.

The materials sector has thirteen industries all related to mining, making, and delivering essential commodities. They are: agricultural inputs; aluminum; building materials; chemicals; coal; copper; industrial metals; steel; paper; silver; specialty chemicals; gold.

Today I'm reviewing a mid-cap steel company named Gerdau SA. Their trading ticker symbol is GGB

Gerdau SA produces steel and steel products. It operates in civil construction, agriculture, automotive, iron ore, exports, research and development, and home steel products sectors.
It offers products such as nails, rebar, columns, billets, slabs, piatina, tribar tutor, mechanical construction bars, reinforced steel locks.
The company has operations in Asia, the Americas, and Europe. It mainly distributes its products in North America and Brazil.
It sells its products through independent distributors, direct sales from the mills, and its retail network.
The company was founded in 1901 and is based in Sao Paulo, Brazil. Gerdau S.A. is a subsidiary of Metalúrgica Gerdau S.A.

I use three key data points to gauge GGB:

(1) Price

(2) Dividends

(3) Returns

Besides those three, several other keys will finally unlock an equity or fund in which to invest. Those first three primary keys, however, best tell whether a company has made, is making, and will make money.

GGB Price

Gerdau's price per share closed at $3.63 Friday. A year ago its price was $3.72. Price fell $0.09 or over 2.4% in the past year. Assuming Gerdau's stock trades in the range of $3.00 to $5.00 this year, Gerdau's recent $3.63 price could rise by $0.87 and go to $4.50 by mid-June, 2020.

GGB Dividends

Gerdau's most recent quarterly dividend was $0.018 declared May 1st and paid June 5th. That $0.018 Q payout equates to an annual dividend of $0.072 which produces a yield of 1.98% based on yesterday's $3.63 closing price.

Gains For GGB?

Adding the $0.072 annual estimated dividend to my $0.87 estimate of Gerdau's price upside shows a $0.94 potential gross annual gain, per share, which will be reduced by costs to trade those shares.

A little over $1,000.00 today at the $3.63 recent stock price would buy us 275 Gerdau SA shares.

A $10 broker fee paid half at purchase and half at sale will cost us $0.04 per share.

Subtract that $0.04 brokerage cost from the estimated $0.94 gross annual gain leaves a net gain of $0.90 X 275 shares = $247.50 or a 24.75% net gain on a $990.25 investment.

Therefore, Gerdau SA now shows a possible net gain of 24.75% including a 1.98% dividend yield.

Five brokers track GGB stock:

Three say "buy" GGB shares
Two say GGB shares will "outperform" peers

Therefore, you can look at GGB and see it has made money, is making money, and could net a 24.75% gain including a 1.98% dividend yield. It could be more, it could be less.

The above speculation is based on past year performance. The actual results remain to be seen to determine if Gerdau SA is worth your time and money.