The Globe and Mail reports in its Tuesday, Sept. 19, edition that Stifel analyst Ian Gillies has reaffirmed his "buy" recommendation for Algoma Steel Group. The Globe's David Leeder writes in the Eye On Equities column that Mr. Gillies boosted his share target by a loonie to $14. Analysts on average target the shares at $12.63. The Globe says Mr. Gillies thinks it is a "complex" time for steel stocks with near-term performance appearing "biased lower for the well known issues stemming the UAW strike." He thinks it is an "opportune time to zag against the crowd." He says the strike will end and demand will return. He notes that we might see a "sharp" pickup in demand making up for lost volumes. He calls Algoma one of his preferred picks to play this trend. Mr. Gillies says in a note: "Algoma Steel is a growth stock as it is embarking on a $850-million (prior: $700-million) capital investment to convert its BOF to an EAF. This will likely increase the company's effective production capacity by 0.7 mmtpa, or 25 per cent. It should also reduce the company's risk related to a rising carbon tax in Canada. The company's strong balance sheet and government support leave it well positioned to fund this growth plan."
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