Nucor vs. Steel Dynamics: Which Steel Stock is a Better Buy?

NYSE: NUE | Nucor Corporation  News, Ratings, and Charts

NUE – Many steel stocks have seen their shares rise as of late due to increased industrial activity and the potential infrastructure legislation. Two steel stocks, in particular, Nucor Corporation (NUE) and Steel Dynamics (STLD), are intriguing plays on the industry. But which is a better buy? Read more to find out.

Steel stocks are garnering attention from investors now that we are on the cusp of infrastructure spending. The reopening of the economy will also be a boon to the steel industry.

Though investing in steel stocks and other infrastructure-oriented companies is not the sexiest investment, it has the potential to be profitable. What matters most is timing and selection. Ideally, investors will scoop up a couple of steel stocks at the right time and hold them through the pending infrastructure boom.

Let’s shift our attention to two specific infrastructure stocks that have the potential to be worthy of your investing dollars: Nucor Corporation (NUE) and Steel Dynamics (STLD).

Nucor Corporation (NUE)

Based in Charlotte, NC, NUE is one of the country’s top producers of steel joists, steel bars, steel decks, and structural steel. The company also makes direct reduced iron in its steel mills. All in all, NUE has more than 120 operating facilities throughout the United States and Canada.

NUE has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. The stock has an A grade in the Momentum and Growth components and a B in the Quality component. You can find out how NUE fares in the remainder of the components, such as Sentiment and Stability, by clicking here. Of the 33 publicly traded companies in the A-rated Steel industry, NUE is ranked 18th. You can find other top stocks in the Steel industry by clicking here.

NUE has had solid price returns highlighted by a three-month price return of 61% and a one-year gain of 154%. Analysts have moved up their average price target for NUE by $39 across the previous 168 days. Three analysts currently rate the stock a Buy, while two rate it a Strong Buy. NUE has a low forward P/E ratio of 9.15. This means the stock is undervalued at its current price. 

Steel Dynamics (STLD)

Headquartered in Fort Wayne, Indiana, STLD is one of the top steel producers and metals recycling businesses in the entire country. The company has a steelmaking and coating capacity in excess of 11 million tons. STLD is all the more intriguing as it makes a wide array of steel products, including specialty products.

STLD has an overall grade of C, translating into a Neutral rating in our POWR Ratings system. STLD has an A in the Momentum component and Bs in the Growth and Sentiment components. However, STLD has Cs in the Quality and Value components. You can find out how STLD fares in the Stability component by clicking here. STLD is ranked 20th in the same industry as NUE.

Analysts have hiked their average price target for STLD by $26 in the past 161 days. STLD’s forward P/E ratio is an absurdly low 6.99, but its beta of 1.46 indicates it is more volatile than the market.

Which is the Better Play?

NUE is the better play as it is ranked higher in the Steel industry and has a better overall rating in the POWR Ratings. STLD is not a bad company, but investors should wait until its rating in POWR Ratings moves up to a Buy or Strong Buy.  

NUE shares were trading at $106.68 per share on Friday morning, up $0.37 (+0.35%). Year-to-date, NUE has gained 101.60%, versus a 13.65% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
NUEGet RatingGet RatingGet Rating
STLDGet RatingGet RatingGet Rating

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