Gerdau S.A. (GGB)
We are keeping our Sell recommendation on Gerdau S.A. (<a href=http://www.zacks.com/stock/quote/ggb>GGB</a>) based on poor first quarter results and the worldwide crises. The company successfully renegotiated part of its debt and banks accepted to relieve some covenants. <p> The company's strategy to grow through acquisitions based on debt created huge leverage and financial debt is expected to increase in the short-term. The huge decline in steel prices and the international economic slowdown creates a more challenging business environment for the steel industry. <p> The company's strategy to grow through acquisitions based on debt is contributing to the negative news. Moreover, huge exposure to the U.S. market during a recession is a major concern.
July 5, 2009 | Filed Under Stocks to Sell
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