## Why NUE Investors Should Think About Investment Cycles

**The Nucor Paradox: Short-Term Winner, Medium-Term Laggard**

Steel giant **Nucor (NYSE: NUE)** presents an intriguing investment puzzle. Over the past month, the stock surged 10.6% while the broader market gained just 2%. Add in an 11.3% jump following strong Q3 results announced in late October, and NUE looks unstoppable. Yet zoom out even slightly, and the picture shifts dramatically.

**One Year: Treading Water**

Nucor's 11.9% one-year return sits 0.7 percentage points behind the **S&P 500**'s 12.6% gain. When dividend reinvestment is factored in, NUE reaches 13.8% total return—still lagging the S&P 500's 14.3%. Throughout most of 2024, Nucor stock struggled as the market rallied, only recently recovering some ground. For income-focused investors, the 1.4% dividend yield provides modest support, but the total return gap remains a concern.

**Three Years: The Opportunity Cost Bite**

The disappointment deepens over three years. Investors who purchased NUE shares on December 8, 2021, have watched their position grow just 6.5% (11.2% including dividends). Meanwhile, the **S&P 500** delivered 74.4% absolute returns and 82.4% total returns during the same stretch. That's roughly a 70-percentage-point performance gap—a sobering reminder of buying into a cyclical sector at the wrong time.

The inflection point came in April 2024 when Nucor released weak Q1 guidance, triggering a sustained decline that persisted even as equity markets pushed higher throughout the remainder of the year.

**Five Years: Where Cyclicality Rewarded**

Here's where the narrative flips. Looking back five years to December 8, 2020, Nucor's total return stands at 209.4%, more than doubling the S&P 500's 100.3%. NUE investors watched their capital more than triple while the broader market simply doubled.

The difference? A spectacular 2021. During that year alone, Nucor stock soared 118.4% on a total return basis, capturing the post-pandemic industrial surge and steel demand recovery. This explosive performance, despite recent underperformance, explains why the five-year compounded return handily beats the market.

**The Cyclical Lesson**

This pattern—strong five-year returns masking painful three-year underperformance—illustrates the inherent volatility of cyclical industries. Steel demand ebbs and flows with economic conditions, construction cycles, and industrial activity. Timing matters enormously. Entry points during demand peaks lead to subsequent drawdowns, while patience through downturns can yield outsized gains when cycles turn.

For investors considering NUE, the data suggests that short-term momentum shouldn't overshadow the understanding that steel stocks require a medium-term holding horizon and conviction in business fundamentals to weather inevitable corrections.