Are ZEUS and IIIN a 'steal' ?
The 3 steel processors that I follow are TONS, ZEUS and IIIN. Until November they traded pretty much in tandem, but since 11/2/04, TONS is up 192% versus only 22% for IIIN and 44% for ZEUS. TONS just reported another record quarter with EPS of 2.37 for their November quarter, up sequentially from 2.17 in the August quarter. That bodes well for strong quarterly results from IIIN and ZEUS. I'm pessimistic about the sector long term, but the short term outlook remains excellent, and TONS reported a strong backlog. ZEUS reported EPS of 1.80 in their September quarter, yet now trades at a deep discount to TONS, with a current share price of about 25 versus 66 for TONS, even with similar EPS. I think the gap will have to close, and I wanted short TONS and go long ZEUS. However no shares of TONS are available for shorting, so I went long on ZEUS anyway. It will be interesting how it plays out ....
