Buy These 2 Steel Stocks That Are Up More than 25% YTD

NASDAQ: STLD | Steel Dynamics Inc. News, Ratings, and Charts

STLD – Despite prevailing worries about a prolonged Ukraine-Russia War disrupting the supply of steel globally, the government’s initiatives to assist the domestic steel industry and robust steel demand could fuel the sector’s growth. Therefore, we think it could be wise to invest in fundamentally sound steel stocks Steel Dynamics (STLD) and United States Steel Corporation (X). These stocks are up more than 25% in price year-to-date. Read on.

Ukraine and Russia are the top suppliers of pig-iron ore, a crucial component in steel production, to the United States. The war between the two countries and consequent import sanctions on Russia have caused a supply shortage in the steel market and fueled an increase in the price of pig-iron ore by 50%. According to a December U.S. Chamber of Commerce survey, the commercial construction industry found that the high price of steel combined with product shortages could stall the post-pandemic commercial construction recovery.

Despite these headwinds, the Biden administration’s initiative to help the domestic steel industry by mandating American steel be used in infrastructure projects receiving federal funding could benefit the steel industry. Also, according to The World Steel Association, steel demand will grow by 0.4% in 2022 to 1,840.2 Mt. The iron and steel market are projected to reach $1883.88 billion by 2026, growing at a 2.9% CAGR.

Therefore, we think it could be wise to invest in fundamentally sound steel stocks Steel Dynamics, Inc. (STLD) and United States Steel Corporation (X), whose stock is up more than 25% year-to-date.

Steel Dynamics, Inc. (STLD)

STLD, along with its subsidiaries, functions as a steel producer and metal recycler in the United States. Steel Operations; Metals Recycling Operations; and Steel Fabrication Operations are the company’s three operational segments. The company is headquartered in Fort Wayne, Indiana.

In February, STLD announced the completion of its acquisition of a minority equity interest in New Process Steel, L.P. New Process Steel is a metals solutions and distribution supply-chain management company headquartered in Houston, Tex. During the first quarter ending March 31, 2022, STLD’s net sales increased 57.1% year-over-year to $5.57 billion. Its  operating income grew 151.6% year-over-year to $1.49 billion, while its net income attributable to STLD increased 156.4% from its prior-year quarter to $1.10 billion. The company’s EPS rose 181.3% year-over-year to $5.71.

The $6.17 consensus EPS estimate for the second quarter, ending June 30, 2022, represents an 81.3% improvement year-over-year. Analysts expect STLD’s revenue to increase 37.2% year-over-year to $6.13 million during the same period. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 41% in price year-to-date and 64.8% over the past three months.

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

STLD is also rated an A grade for Momentum and a B grade for Growth and Quality. Within the A-rated Steel industry, it is ranked #16 of 34 stocks.

To see additional POWR Ratings for Value, Stability, and Sentiment for STLD, click here.

United States Steel Corporation (X)

X produces and sells flat-rolled and tubular steel products primarily in North America and Europe. The Pittsburgh, Pa.-based company has four operating segments: North American Flat-Rolled (Flat-Rolled); Mini Mill; U. S. Steel Europe (USSE); and Tubular Products (Tubular). 

In February, X announced that it would be improving its metallics strategy by insourcing pig iron capabilities at Gary Works. The approximately $60 million investment will produce up to 500,000 tons of pig iron annually and provide improved raw material input for its electric arc furnaces (EAF). The Gary  Works pig iron production is expected to provide nearly 50% of Big River Steel’s other ore-based metallics needs, contribute more than $30 million of run-rate enterprise EBITDA benefits and deliver an internal rate of return in excess of 30%.

For its fourth quarter, ended Dec. 31, 2021, X’s net sales increased 119.4% year-over-year to $5.62 billion. Its adjusted EBITDA grew 1886.2% from its year-ago value to $1.73 billion, while its adjusted net earnings amounted to $1.04 billion. Versus a  $60 million loss in the prior-year quarter. The company’s adjusted EPS came in at $3.64 compared to a $0.27 loss per share in the previous period.

Analysts expect X’s revenue to increase 43.7% year-over-year to $5.26 billion for the first quarter, ending March 31, 2022. The $2.95 consensus EPS estimate for the same period represents a 173.3% improvement year-over-year. The company’s shares have soared 32.7% in price year-to-date and 69.8% over the past three months.

X’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Value and Growth and a B grade for Quality. In the  Steel  industry, it is ranked #14.

In total, we rate X on eight distinct levels. Beyond what we have stated above, we have also given X grades for Momentum, Stability, and Sentiment. Get all the X ratings here.

STLD shares were trading at $89.86 per share on Wednesday morning, up $2.32 (+2.65%). Year-to-date, STLD has gained 45.36%, versus a -11.43% rise in the benchmark S&P 500 index during the same period.

About the Author: Spandan Khandelwal

Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing. More...

More Resources for the Stocks in this Article

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

Most Popular Stories on

Christmas in July for Stock Investors!

Yes, the S&P 500 (SPY) made new highs again on Tuesday. But really it is the 6X gain for the Russell 2000 small cap index Tuesday...and 12% gain this past week that is grabbing everyone’s attention. Let’s discuss why this is happening...if it will continue...and my 12 favorite stocks to rally in the weeks ahead. Read on for more...

3 Promising Tech Stocks Under $40 for Long-Term Investment

The increasing demand for technology services worldwide fuels the tech industry. Amid this backdrop, it could be wise to buy under $40 tech stocks, such as HP Inc. (HPQ), Box, Inc. (BOX), and Teradata Corp (TDC), for long-term investment. Continue reading…

3 MedTech Stocks to Add to Your Portfolio in July

The MedTech sector’s promising future is driven by technological advances, unceasing demand for medical treatments due to an aging population, and increasing global incidence of diseases. To that end, strong MedTech stocks such as Tactile Systems Technology (TCMD), Electromed (ELMD), and Embecta (EMBC) could be wise portfolio additions in July. Read more...

3 Bank Stocks Benefiting From High Interest Rates

Amid global economic uncertainties, major U.S. banks like JPMorgan (JPM), Wells Fargo & Company (WFC), and PNC Financial Services (PNC) have defied expectations with strong revenue and earnings reports for the second quarter. Considering their robust performance, investing in these stocks could offer stable returns to your portfolio. Read more…

Investor Alert: Load Up on Small Cap Stocks!

Large caps time in the sun is now over and thus no shock that the S&P 500 (SPY) pulled back from recent highs. It is time for small caps to shine which was clear in their nearly 4% gain Thursday even as the Magnificent 7 was bathed in red. Why is this happening? What comes next? And what are the best stocks to own now? The answers to all that and more are shared in the commentary below...

Read More Stories

More Steel Dynamics Inc. (STLD) News View All

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