3 Stocks to Buy: BP plc (BP), Telefonica S.A. (TEF), AK Steel Holding Corporation (AKS)

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AK Steel Holding Corporation (NYSE:AKS)

Goldman Sachs recently recommended selling AKS. I disagree and I just made a bet buying the stock at $4.08 (8% down for the day). The company is an ultra leveraged play on the US steel industry and I think this will be a turning year for this specific industry. AKS should benefit above most producers. Thanks to its recent equity and debt issuances AKS should not have any financing problems at least until 2018 and its Capex efforts are being correctly directed to ameliorate its cost efficiencies and competitiveness. The upside for AKS equity investors may come from better operating results starting in 1Q 2013 and from an increase in M&A activity within the steel industry starting at some point next year. AKS trades at 2013 16x P/E and 5.2 EV/EBITDA, but results are expected to boom from this year and on. I think the US economy is into a continued rebound mode and AKS is a great bet into this trend.

My portfolio is a risky one. It is supposed to offer me a low but growing 2.88% cash dividend yield and its the first equity portfolio I build in a long time. My investment themes are (1) The recovery of BP as one of the main oil players in the world, (2) The success of TEF´s strategy to get out from the woods and (3) A sustained US economic recovery. I might be wrong. Time shall say.

The article 3 Stocks to Buy originally appeared on Fool.com and is written by Federico Zaldua.

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