Nucor (NYSE: NUE) is a steel company, and given the inherent cyclical nature of the steel industry, this has a material impact on its financial results. Yet Nucor has achieved incredible results despite the cyclical nature of the industry it operates in.

In fact, with 51 consecutive annual dividend increases, the company has joined an elite group known as the "Dividend Kings." That's why now, with the stock down about 33% from its recent highs, it's a good time to buy Nucor Steel with the plan to hold it forever.

You might think that a stock losing about a third of its value in about a year would be a painful experience. In some ways that is true, but it was not an unusual event for Nucor. The losses in 2022 will be similar and shorter.

In fact, if you look back over the past few decades, Nucor's stock has lost 25% or more in value a dozen times. This is not for investors with weak appetites. If you can't handle this level of volatility, you should avoid Nucor Steel entirely.

The problem is that since the early 1990s, Nucor Steel's total returns (including reinvested dividends) have exceeded the returns you would have earned if you owned the company. SPDR S&P 500 Trust (NYSE:SPY). Basically, despite the volatility, and even after the recent decline, Nucor shares have moved significantly higher over time.

Given the highly cyclical nature of the steel industry, share price volatility here isn't shocking. From bridges to buildings to household appliances, steel is everywhere.

When commodity prices weaken due to lower demand, Nucor Steel's top and bottom lines will decline. That's essentially what's happening right now, with the company's earnings falling sharply from their recent peaks.

The company understands the dynamics of the industry well and has long focused on having a strong balance sheet to be able to weather normal downturns. The debt-to-equity ratio is currently around 0.33, which is reasonable for any company.

It has also built a diversified business with a large portfolio of value-added products. Margins are higher for such products, and diversification means there are more growth levers to pull even amid general weakness in the steel industry.

Nucor also has a habit of investing during downturns in the industry. Management often talks about higher highs and higher lows in earnings, which basically means it's always looking to improve its business no matter what stage of the steel cycle it's in. The current economic downturn is no exception, with capital spending expected to be approximately $3 billion in the 12 months to the end of the third quarter of 2024. That's well above the recent average run rate of about $1.9 billion per year.

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