Scrap metal company SGM slipped 2.5% on Monday, taking its decline year-to-date to almost 30%. The company delivered a disappointing update earlier this month, driving the stock down to fresh multi-year lows, and it clearly remains in the naughty corner. While we believe the cyclical backdrop for the business is approaching a bottom, the company must remain diligent in its ongoing cost-out path as the market’s confidence is low even after the recent run in primary non-ferrous prices. A dip down towards $10 will offer some reasonable risk/reward, but that’s another ~8% lower.
- We have no interest in SGM, with new 3-year lows looking & feeling inevitable in the short term.
MM is neutral to bearish towards SGM
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