Zacks Analyst Blog Highlights: Nucor, General Motors, Ford, Votorantim and Aracruz Celulose.

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Nucor Corporation (NYSE: NUE), General Motors (NYSE: GM), Ford (NYSE: F), Votorantim Celulose e Papel S.A. (NYSE: VCP) and Aracruz Celulose (NYSE: ARA).

See the latest posts to the Analyst Blog: http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Monday's Analyst Blog:

Hold-Rated Nucor Target Upped

Nucor Corporation (NYSE: NUE) is the nation's largest recycler of steel scrap. Long-term steel contracts, constant cost reduction efforts, higher steel prices, lower interest rates, strong cash flow position and a dominant acquisition strategy raise our optimism with respect to the stock's performance in the coming quarters.

However, a slowdown in steel demand from the automobile sector and increased production in China are matters of concern. Thus, we rate the stock a Hold and raise our six-month target price to $76.00.

We anticipate that Nucor's steel realizations will benefit over the next couple of quarters because of long-term steel contracts. Nearly 55% of Nucor's steel sheet volumes are under long-term price contracts, which will provide the company a cushion against higher raw material costs. Nucor had been able to successfully pass on higher raw material costs (namely scrap and natural gas costs) through a mechanism of steel surcharges, which helped NUE maintain or even improve its operating margins.

Slowdown in steel demand from the automobile sector and increased Chinese production are matters of concern. Chinese steel output has outpaced demand, causing excess supplies and higher inventories. Further, we remain cautious regarding the weaker demand outlook from key sectors such as automobiles and construction. Some of the larger auto companies including General Motors (NYSE: GM) and Ford Motor Company (NYSE: F) are resorting to production cuts. This should lower demand for a variety of Nucor's steel products.

Brazil Currency Keeps VCP a Hold

We are keeping our Hold recommendation on Votorantim Celulose e Papel S.A. (NYSE: VCP). Demand for pulp and paper remains heated in Brazil and abroad, especially in Asia, which is keeping prices up. First quarter 2008 results were in-line with our expectations, and the short-term outlook for the pulp and paper market remains encouraging. However, sales have stagnated, and the less benign Brazilian monetary policy is a source of concern.

Finally, the continued strength of the Brazilian real is troubling, since it undermines the company's exports and increases domestic competition. All things considered, we believe that it is still prudent to keep a Hold recommendation on VCP. VCP shares are trading at 15.1x our 2008 earnings estimate, close to the industry median. VCP posted better-than-expected results in the fourth quarter 2007 and results as expected in the first quarter 2008. The outlook for pulp prices in the near future remains encouraging.

However, the continued appreciation of the Brazilian real and the stagnated revenues are huge concerns. Last but not the least, the increasing likelihood for a recession in the U.S. remains a real threat for commodities prices in general and pulp in particular. We expect the shares to trade closer to the current valuation of Aracruz Celulose (NYSE: ARA) the biggest pulp producer in Brazil, around 16x our 2008 EPS. Our target price is $33.50.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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