During the recent trading sessions stock of AK Steel Holding Corporation (NYSE:AKS) was gathering the crowd in the stock market. Many experts agree that the truth about a stock is best reflected in the way it moves on the chart. For this stock, the chart has a lot to say about future performance.
How has the stock performed recently?
AK Steel Holding Corporation (NYSE:AKS) in the last month has increased +18.35%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -1466%. After the latest session, which saw the stock close at a price of $5.03, AKS sits below its 52-week high. AK Steel Holding Corporation (NYSE:AKS) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that AKS may be headed in the future. To do this, analysts often study the speed and magnitude of a stock’s price movements with what are known as momentum indicators. The logic is that as a stock’s momentum slows, it may be nearing key support or resistance levels and possibly the end of a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for AKS is 51.83%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 79.38%, tells a different story, and suggests that AKS currently trades in overbought territory.
What do the trading volumes reveal?
Price isn’t the only tool analysts use to forecast future performance. Volume patterns can also reveal some important insights. If, for instance, a stock’s volumes suddenly increase by a significant amount, it’s usually a sign that the level of conviction behind the trade is high. Investors may feel very strongly about the future direction of the stock in question. AK Steel Holding Corporation (AKS) average trading volume of 13,936,570 during the past month is 21.7% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
AKS is currently undervalued by -11.75% relative to the average 1-year price target of $5.70 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.50, which implies that analysts are generally neutral in their outlook for AKS over the next year.
How risky is the stock?
No study on the valuation of a stock is complete without taking into account risk. When analyzing the systematic risk associated with a stock, analysts look at beta, which measures the stock’s volatility relative to the overall market.
AK Steel Holding Corporation (NYSE:AKS) has a beta of 2.89, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. AKS therefore has a above average level of market risk. During the past couple of weeks, AKS average daily volatility was 35.07%, which is 20.59 percentage points lower than the average volatility over the past 100 days.