Are These The Best Steel Stocks To Invest In This Week?
As the economy roars back to life, demand for construction metals and materials would follow suit. Because of that, steel stocks are now making headlines in the stock market today. Indeed, this would be the case as countries that are handling the pandemic well are planning for the return to normalcy. Back in April, President Joe Biden proposed a massive $2.3 trillion plan to bolster infrastructure and economic recovery efforts. While many industries would stand to benefit from this, steel would be a common factor across the board. Given the importance of steel in countless industries, investors could be looking for the best steel stocks to buy now.
To better understand this, we could take a closer look at what exactly President Biden’s proposed plan covers. Among the key sectors highlighted would be transportation infrastructure which, by extension, includes electric vehicle (EV) development. Should the bill pass, a whopping $621 billion would be invested in this sector. Subsequently, with steel being a core component of many manufacturing processes here, steel prices would have more room to grow. In fact, steel prices have already risen by 60% year-to-date, according to the S&P Global Platts readings. Because of all this, steel stocks could be a viable play for investors now.
Evidently, we can see steel companies continue to flourish as demand drives the price of the commodity higher. Steel manufacturers like ArcelorMittal (NYSE: MT) and Schnitzer Steel (NASDAQ: SCHN) would be notable examples now. Both companies are responsible for processing raw materials to eventually produce steel, enabling numerous industries in our world today. Now, both MT stock and SCHN stock are up by over 165% in the past year. On that note, here are three top steel stocks to know in the stock market now.
Top Steel Stocks To Buy [Or Sell] In June
- Cleveland-Cliffs Inc. (NYSE: CLF)
- United States Steel Corporation (NYSE: X)
- TimkenSteel Corporation (NYSE: TMST)
Cleveland-Cliff is an Ohio-based company that specializes in the mining, beneficiation, pelletizing of iron ore as well as steelmaking. In fact, it is one of the largest flat-rolled steel producers in North America. The company is vertically integrated into steelmaking, mining the raw materials to primary steelmaking and downstream finishing, stamping, and tooling. Cleveland-Cliff is also one of the largest suppliers of steel to the automotive industry in the U.S. CLF stock currently trades at $22.88 as of 10:40 a.m. ET and has been up by over 200% in the last year.
On Tuesday, the company announced that it has increased its second-quarter and full-year 2021 financial guidance. In detail, its forecast includes a second-quarter 2021 EBITDA of $1.3 billion and full-year 2021 adjusted EBITDA is $5 billion. Last week, the company also celebrated its initial six months of continued operation and production of hot-briquetted iron (HBI) at the company’s state-of-the-art Direct Reduction plant in Toledo, Ohio.
In April, Cleveland-Cliff also reported its first-quarter 2021 financials. In it, the company posted a net income of $41 million or $0.07 per diluted share. Mr. Goncalves added, “As the year progresses, it will become abundantly clear that the pricing environment we are in – and will continue to benefit from going forward – is not a consequence of luck. Our expectation of $4 billion in adjusted EBITDA for the full year is predicated on conservative pricing expectations relative to today’s pricing and the current forward curve. This will allow us to generate record levels of free cash flow and pay down a substantial amount of debt, allowing us to reach leverage of less than 1x by the end of the year.” For these reasons, will you consider buying CLF stock?
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United States Steel Corporation
United States Steel Corporation (U.S. Steel) is an integrated steel producer. Specifically, the company is invested in building its capabilities in both integrated and mini-mill steelmaking technologies. The company is a Fortune 250 company and prides itself on innovation. Its high-value steel products are used in the automotive, construction, energy, and packaging industries. X stock currently trades at $26.26 as of 10:42 a.m. ET and has been up by over 150% in the last year.
The company announced last week that it has agreed to sell Transtar to Fortress Transportation and Infrastructure Investors for $640 million. Upon completion of the sale in the third quarter of 2021, U.S. Steel will recognize key strategic benefits from the transaction. This would include further aligning the company’s operating focus on its core mining and steelmaking business under its Best for All strategy. It will also strengthen its balance sheet which includes deleveraging.
In April, the company also announced its first-quarter financials. U.S. Steel posted net earnings of $91 million for the quarter or $0.35 per diluted share. It also ended the quarter with $753 million in cash. The company believes that there is optimism in the strength of its business as it reported strong first-quarter financials. Given this piece of news, will you consider adding X stock to your portfolio?
Next, we will be looking at the TimkenSteel Corporation. In brief, the Ohio-based company manufactures high-performance carbon and alloy steel products. The likes of which it mainly provides to the automotive and energy industries, among other industrial end markets. In particular, TimkenSteel is a leading producer of alloy steel bars, seamless mechanical tubing, and precision steel components.
With over a century of experience, the company is no newcomer to the industry. For a sense of scale, it posted sales of $831 million in 2020. Now, TMST stock currently trades at $14.25 as of 10:42 a.m. ET. With the current focus on steel, could the company’s shares be worth watching?
Well, for one thing, the company appears to be kicking into high gear on the operational front. We can see this from its stellar first-quarter earnings report posted last month. In it, TimkenSteel saw its net income surge by 149% year-over-year. This was followed by a 145% jump in earnings per share over the same time as well. CEO Mike Williams cites well-coordinated efforts by the TimkenSteel team to improve manufacturing efficiency and utilization throughout the quarter as key growth drivers. Overall, with the automotive and industrial sectors kicking into high gear, would TMST stock be a top buy for you now?