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Nucor Corporation
Introduction
Nucor Corporation, the largest U.S. mini-mill, continues to gain market share in flat roll and strip steel. Recent successful acquisitions, application of new technologies, prospects for global growth, a strong balance sheet, as well as improved economic outlook for the steel industry, make Nucor an attractive buy with a near term stock price target of $65 to $70.
Background
Nucor Corporation (NUE) was founded by auto manufacturer Ranson E. Olds. Through a series of permutations the company evolved into a nuclear instrument and electronics business, known as the Nuclear Corporation of America before regaining its focus in the steel business and changing its name to Nucor Corporation in 1972. In every year and every quarter since its incorporation, Nucor has been profitable. Steel production has grown from 5.7 million tons in 1993 to 19.7 million tons by 2004. Sales have grown from $2.3 billion in 1993 to $11.4 billion by 2004.
Nucor's culture focuses on a low cost structure. The company is non-union in contrast to the large integrated steel companies. Therefore, it doesn't have any legacy costs. The pay system is incentive-based, and it maintains employee morale using a no lay-off practice. Nucor has a decentralized, flat management structure.
Nucor produces steel by melting recycled scrap in electric arc furnaces to make carbon steel products in its mini-mills. Nucor currently has 47 operating facilities in 15 states. The company is the largest recycler in the United States, recycling 17 million tons of scrap steel in 2004.
Nucor's products include both ...