The global iron and steel industry is experiencing steady growth, driven by rising investments in residential construction and the increasing demand for durable and cost-effective building materials. With a high strength-to-weight ratio and exceptional durability, iron and steel products are essential for supporting modern construction and infrastructure projects.

As the year ends, solid steel stocks Grupo Simec, S.A.B. de C.V. (SIM - Get Rating), Mesabi Trust (MSB - Get Rating), and Friedman Industries, Incorporated (FRD - Get Rating) could be ideal buys. These stocks are poised to meet the growing demand for structural steel, tubular products, and other essential components in construction and beyond.

The global steel industry is driven by growing investments in infrastructure and urbanization, particularly in emerging markets, and the expanding automotive sector, fueled by increased production of electric vehicles. The transition to renewable energy sources, such as wind turbines, also boosts demand for specialized steel. Additionally, advancements in lightweight and high-strength steel enhance its applications across construction and manufacturing.

The World Steel Association’s updated Short Range Outlook projects a 1.2% rise in global steel demand to 1,772 Mt in FY2025, marking a rebound after three years of contraction.

With a promising growth outlook ahead, let’s explore the Steel stocks in more detail:

Stock #3: Grupo Simec, S.A.B. de C.V. (SIM - Get Rating)

SIM headquartered in Guadalajara, Mexico, manufactures and distributes a wide range of steel and steel alloy products, including SBQ steel, structural steel, and wire rods. Its products serve diverse industries such as automotive, construction, and machinery across Mexico, the U.S., and international markets.

On October 30, SIM had reported a liquid steel spill at its Apizaco, Tlaxcala, plant, resulting in the loss of lives and a temporary halt in operations.

In the fiscal third quarter ended September 30, 2024, SIM’s net sales were MXN.55 million ($41.81 thousand). Its gross profit was MXN2.16 million ($10.56 thousand). In addition, the company posted a total comprehensive income of PS2.59 million ($12.67 thousand)

It surpassed the consensus revenue estimates in three of the trailing four quarters.

Over the past six months, the stock has plunged 9.5% to close the last trading session at $27.15.

SIM’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

SIM has a B grade in Stability, Sentiment, and Quality. It is ranked #7 out of 30 stocks in the Steel industry.

To access SIM’s Growth, Value, and Momentum ratings, click here.

Stock #2: Friedman Industries, Incorporated (FRD - Get Rating)

FRD manufactures and processes steel products through its Flat-Roll Products and Tubular Products segments. It caters to steel distributors and manufacturers of steel-based products like buildings, trailers, and structural applications, with specialized offerings such as line and oil country pipes.

On December 3, FRD announced a cash dividend of $0.04 per share. The dividend is set to be paid on February 14, 2025, to shareholders of record as of January 17, 2025. It pays an annual dividend of $0.16, which translates to a dividend yield of 1.03% at the prevailing price levels.

During the fiscal second quarter that ended October 31, 2024, FRD’s net sales were $106.76 thousand. Its operating cash flow was $ 10.80 million. In addition, the company’s total liabilities came in at $80.40 thousand.

Shares of FRD have gained 3.8% over the past six months to close the last trading session at $15.06.

FRD’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

FRD has an A grade for Value and a B in Sentiment and Quality. It is ranked #3 in the same industry.

Beyond what we have stated above, we also have given FRD grades for Growth, Momentum, and Stability. Get all the FRD’s ratings here.

Stock #1: Mesabi Trust (MSB - Get Rating)

MSB is a royalty trust operating in the iron ore mining industry within the United States, deriving its income from royalties tied to the extraction and sale of iron ore.

MSB’s total revenues increased 1513.6% year-over-year to $79 million in the fiscal third quarter that ended on September 30, 2024. Its cash and cash equivalents came in at $ 95.91 million, up to 300%. In addition, the company’s net income reached $ 78.33 million, up 1816.9% and net income per unit reached $5.97, up 1817.1% from the same quarter last year.

Over the past year, the stock has gained 41.4% to close the last trading session at $28.12. It soared 61.2% past six months.

MSB’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

It has an A grade for Growth and Quality and a B for Value. It tops the same industry.

Click here to see MSB’s ratings for Momentum, Stability, and Sentiment.

What To Do Next?

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SIM shares were unchanged in premarket trading Tuesday. Year-to-date, SIM has declined -12.90%, versus a 25.72% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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