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Byline: KIRK SHINKLE
Lloyd O'Carroll joined BB&T Corp. as chief economist and metals analyst in 1997 after 19 years in the aluminum industry.
He talked with IBD about the prospects for the future of metal processors, fabricators and scrap dealers in the improving economy, plus what investors should be looking for when considering the sector.
IBD: What macroeconomic factors make for a good investing environment for these kinds of companies?
Lloyd O'Carroll: It's really the industrial economy that drives them, (specifically) autos. In pure steel processing, probably 40% of the market is automotive, with the rest being a range of various manufacturing, including everything from snowmobiles and lawn mowers, to capital equipment and a little bit of construction. Good industrial and automotive production -- not sales -- is what drives these stocks.
IBD: Other than the auto industry, how are other markets looking?
O'Carroll: They're starting to pick up. They've been pretty depressed, but volumes are coming back. You can see it in industrial production data.