Reliance Steel and Aluminium is the largest metals service center in North America. Headquartered in Los Angeles, Reliance operates hundreds of metals service centers globally. It provides metals processing services and distributes a line of approximately 50 000 metal products.

In August 2011, the company announced that it has completed the acquisition of all the outstanding capital securities of Continental Alloys & Services and certain affiliated companies, for a transaction value of $415 million. This external growing strategy continued with the acquisition on February 1st of McKey Perforating, a metal perforating and fabricating company in Wisconsin.

Fundamental analysis demonstrates the strong qualities of the company. According to Thomson Reuters, the annual publications should show a turnover increase about 23% due to the acquisitions made during the 2011 exercise. Net result will increase at $335 million against $194 million in 2010, representing a 72% growth. Expectations on EPS are 70% higher than last year at $4.45. Thomson-Reuters consensus is widely positioned on the “green area” with 9 recommendations at “Buy” or “Accumulate” out of the 11 analysts following the firm.

On the bounce of an upward wave, the share shows breathlessness in the 53/55 USD area. A consolidation phase is ongoing under short-term resistance at 56 USD. The moving averages orientation is distinctly bullish and the short term resistance crossing is expectable, marking the beginning of a new upward trend to the long term resistance at 58.4 USD.

A buying strategy will be engaged as soon as the short term resistance will be crossed at 56 USD. An objective will be fixed at 58.4 USD then 60.6 USD and a stop loss will be placed at 53 USD.