These 3 Steel Stocks Are Solid Picks
Metals and mining stocks have been a major bright spot in the stock market this year, and with some analysts anticipating a commodity super-cycle ahead, there could still be a lot more upside for investors that have positions in the strongest companies in the sector. Steel stocks, in particular, stand out as a great option as demand for the crucial metal rebounds following the pandemic. Combine that with the fact that the conflict in Ukraine has pushed steel prices even higher thanks to a shortage in pig iron and it's easy to understand how these companies could be in for another big year.
What we have right now is an increasingly tight supply of steel along with rising demand, which has led to a perfect environment for the companies that deal with this valuable asset. That’s why we’ve put together the following list of 3 stellar steel stocks to buy now. Each one of these companies offers a great way to gain exposure to steel and could be in for a sustained rally going forward.
Let’s take a closer look at what makes these companies stand out below.
United States Steel Corp (NYSE:X)
First up is United States Steel Corp, an integrated steelmaker with a manufacturing capacity of over 22 million tons at plants in North America and Eastern Europe. U.S. Steel has been benefitting from high steel prices both domestically and in Europe, and the company has been making some intriguing acquisitions over the last few years that should really pay off over the long run. Notably, the acquisition of top-tier mini mill Big River Steel could be a strong positive going forward, as the strategic move resulted in North America’s only customer-centric “best-of-both” steelmaker, combining integrated and mini-mill technologies to improve through-cycle shareholder returns. U.S. Steel
also recently announced that it has plans to build a new mill in Arkansas with two electric arc furnaces, which should lead to even stronger steel production going forward. The stock has rallied over 54% year-to-date and could be a great buy-the-dip opportunity for investors to consider going forward. The company will announce its Q1 earnings on April 28th, so keep an eye on how shares perform both before and after the release.
This Brazil-based company is one of the world’s largest iron ore miners and one of the world’s largest nickel producers, which makes it a great option to consider for exposure to metals & mining companies. Vale also produces copper, metallurgical and thermal coal, gold, silver, cobalt, and platinum group metals, although the company generates the majority of its revenue from iron ore. The stock has been on fire in 2022 and has rallied over 41% year-to-date, yet investors still might want to consider adding shares given its 3.5 P/E ratio and a steadily improving balance sheet.
It’s worth mentioning that Vale recently reinstated its dividend payments, which means investors can take advantage of an attractive 13.39% dividend yield here. There’s also a lot to like about how the company’s sales increased by 36% in 2021, which was the result of higher production and higher pricing across all products. While there is some risk here related to slowing steel demand in China and potential liabilities for the Brumadinho dam failure in 2019, Vale
is still set to outperform in a market environment with strong steel prices and could be a great stock to consider adding at this time.
Reliance Steel & Aluminum Corp (NYSE: RS)
If you’re interested in another fundamentally strong steel stock that can help you ride the current tailwinds impacting the industry, Reliance Steel & Aluminum
should definitely be on your radar. It’s the largest metals service center company in North America and a company that provides materials management and metals processing services to over 125,000 customers across many different industries. Investors should be attracted to the fact that Reliance Steel & Aluminum serves so many different industries, and end markets like energy, commercial aerospace, and heavy equipment are all set to rebound in the coming quarters.
This stock is also a solid pick thanks to a 1.9% dividend yield and a 3-year dividend growth rate (CAGR) of 12.74%. The company also repurchased about 2.1 million shares for $324 million in 2021, which is a testament to its financial strength and commitment to rewarding long-term shareholders. With shares up over 16% year-to-date and close to hitting new all-time highs, this is one stellar steel stock absolutely worth adding to your watch list at this time.
Companies Mentioned in This Article
Compare These Stocks
Add These Stocks to My Watchlist
Before you consider United States Steel, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and United States Steel wasn't on the list.
While United States Steel currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here