2 Steel Stocks to Buy on the Dip: Nucor and United States Steel

NYSE: NUE | Nucor Corp. News, Ratings, and Charts

NUE – Amid depressed demand due to China’s ongoing COVID-19-related lockdowns and disrupted global supply chains owing to geopolitical tensions, steel prices have witnessed a significant decline over the past month. However, amid the market sell-off, we think buying the stocks of fundamentally sound steel companies Nucor (NUE) and United States Steel (X) at attractive valuations could be rewarding. Read on.

The steel industry has been under immense pressure lately due to reduced demand and logistical disruptions. China’s strict lockdown measures have reduced steel consumption and industrial production, while the Russia-Ukraine war has aggravated supply chain disruptions. These factors have led to a drastic dip in steel prices. The Raw Steels Monthly Metals Index (MMI) plunged 8.9% from April to May.

But amid the broad market sell-offs, various buy-the-dip opportunities have been created for investors. With rebounding demand in the manufacturing and construction sectors and increasing investments in the infrastructure sector, the steel industry has promising growth prospects over the long run.

Given these factors, we think it could be profitable to invest in quality steel stocks Nucor Corporation (NUE - Get Rating) and United States Steel Corporation (X - Get Rating) on their price dips.

Nucor Corporation (NUE - Get Rating)

NUE in Charlotte, N.C., manufactures and sells steel and steel products. The company operates through three segments: Steel Mills; Steel Products; and Raw Materials. Its Steel Mills segment produces hot-rolled, cold-rolled, sheet piling, plate steel, and bar steel products. Its Steel Products segment provides hollow structural section steel tubing products, cold finished steel products, and wire and wire mesh products. Its Raw Materials segment produces direct reduced iron (DRI) and brokers ferrous and nonferrous metals.

Last month, NUE acquired Elite Storage Solutions, a steel racking manufacturer, for $75 million. “We are excited to grow our steel racking capabilities with this acquisition of Elite Storage Solutions. Establishing a manufacturing presence in the Southeast complements our existing steel racking business and allows us to serve our racking customers nationwide more efficiently,” said Giff Daughtridge, President of Sheet and Tubular Products.

In February, NUE acquired a majority ownership position in California Steel Industries, Inc. by purchasing a 50% equity interest from a subsidiary of Vale S.A. and a 1% equity ownership stake from JFR Steel Corporation. This joint venture is expected to give NUE a strong presence in the Western region and accelerate its ability to produce a wider range of value-added sheet products.

In its fiscal year 2022 first quarter, ended April 2, 2022, NUE’s net sales increased 49.5% year-over-year to $10.49 billion. Its earnings before income taxes and noncontrolling interests grew 123.2% year-over-year to $2.80 billion. The company’s net earnings rose 125.5% year-over-year to $2.23 billion. Its net earnings attributable to NUE stockholders and net earnings per share came in at $2.10 billion and $7.67, respectively, registering an increase of 122.4% and 147.4% from the prior-year period.

Analysts expect NUE’s EPS to grow 61.1% year-over-year to $8.34 for its fiscal 2022 second quarter, ending June 30, 2022. It is no surprise that it has surpassed the consensus EPS estimates in three of the trailing four quarters. The $11.79 billion consensus revenue estimate for the current quarter represents a 34.1% rise from the prior-year period.

The stock has plunged 25% in price over the past month and closed yesterday’s trading session at $125.07.

NUE’s POWR Ratings reflect this promising outlook. It has an overall grade of B, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

NUE has a B grade for Growth and Quality. Within the A-rated Steel industry, it is ranked #11 of 33 stocks. To see additional POWR Ratings (Value, Momentum, Stability, and Sentiment) for NUE, click here.

United States Steel Corporation (X - Get Rating)

Pittsburgh, Pa.-based X manufactures and sells flat-rolled and tubular steel products in North America and Europe. The company operates through four segments: North American Flat-Rolled (Flat-Rolled); Mini Mill; U.S. Steel Europe (USSE); and Tubular Products (Tubular). It provides strip mill plates, tin mill products, iron ore, and coke. In addition, it offers hot-rolled, cold-rolled, coated sheets and electrical products, electric resistance welded sheet casting and tubing products, and line pipe and mechanical tubing products.

On Feb.28, X advanced its metallics strategy with pig iron investment at Gary Works. The $60 million investment might produce up to $500,000 tons of pig iron annually and provide a critical raw material input for its electric arc furnaces (EAF). X’s low-cost iron ore is a significant strategic advantage. Further, an investment in pig iron is expected to transfer the company’s low-cost iron ore advantage to its EAF footprint and accelerate growth.

In January, X and Carnegie Foundry, a leading robotics and AI studio agreed to a strategic investment and partnership. The two companies will work to accelerate industrial automation driven by advanced robotics and AI. With this partnership, X might fulfill its customers’ needs for a resilient and efficient supply chain by introducing highly advanced technologies.

X’s net sales increased 42.8% year-over-year to $5.23 billion in its fiscal 2022 first quarter, ended March 31, 2022. Its earnings before income taxes rose 1,126.1% year-over-year to $1.12 billion. Its adjusted EBITDA grew 142.6% from its year-ago value to $1.34 billion. The company’s adjusted earnings and net earnings per share attributable to X were  $891 million and $3.05, respectively, registering an increase of 214.8% and 182.4% year-over-year.

Analysts expect X’s revenue for its fiscal 2022 second quarter, ending June 30, 2022, to be $6 billion, representing a 19.4% rise from the same period in 2021. The Street expects the company’s EPS for the current quarter to come in at $3.49, representing a 3.5% increase year-over-year. Also, the company has an impressive revenue and earnings history because it has topped the consensus revenue and EPS estimates in three of the trailing four quarters.

Shares of X have decreased 30.9% over the past month and closed yesterday’s trading session at $25.23.

X’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B grade, which translates to Buy in our proprietary rating system.

X has an A grade for Value and a B grade for Quality. Within the Steel industry, it is ranked #18 of 33 stocks. To see additional POWR Ratings (Momentum, Sentiment, Stability, and Growth) for X, click here.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


NUE shares were trading at $121.30 per share on Wednesday afternoon, down $3.77 (-3.01%). Year-to-date, NUE has gained 6.62%, versus a -16.25% rise in the benchmark S&P 500 index during the same period.


About the Author: Mangeet Kaur Bouns


Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...


More Resources for the Stocks in this Article

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

Most Popular Stories on StockNews.com


Trump or the Fed More Important to Stock Investors?

The S&P 500 (SPY) is flirting with new highs once again. But it is not very clear what is driving these stock price gains. That is why Steve Reitmeister shares his latest views including a market outlook, trading plan and top picks to stay on the right side of the action.

3 Dividend Growth Stocks for Long-Term Wealth

Dividend-growth stocks offer steady income and long-term value. With the Fed holding rates and inflation expected to ease, now is an opportune time to invest in companies like AbbVie (ABBV), Energy Transfer (ET), and Cheniere Energy (CQP) that consistently raise payouts. Read more…

3 Sub-$10 Tech Stocks with Multibagger Potential

The tech market is booming, fueled by AI, cloud computing, and digital transformation. With next-gen software, automation, and 5G driving growth, investors have massive opportunities. For those seeking high potential without the hefty price tag, sub-$10 stocks like Yext, Inc. (YEXT), Eventbrite (EB), and inTEST Corp. (INTT) could be your next big win. Read more...

Viavi Solutions vs. Lumentum Holdings: Which Optical Tech Stock Shines Brighter?

The optical tech industry is well-positioned for growth due to technological advancements and increasing demand for seamless connectivity. So, let’s analyze optical tech stocks, Viavi Solutions (VIAV) and Lumentum Holdings (LITE), to determine which optical tech stock shines brighter. Read on...

Investors in “Wait and See” Mode

Have you noticed that the S&P 500 (SPY) has been trading in a tight trading range of only 6,000 to 6,100 the past few weeks? Steve Reitmeister shares why this is happening along with a game plan for being on the right side of the market action. Read on for the full story...

Read More Stories

More Nucor Corp. (NUE) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All NUE News