Time for Cleveland-Cliffs Stock to Break Out? Markets Say Yes

Key Points

• Cleveland-Cliffs has significant future EPS growth that is not yet priced into its current price, a gap that institutional investors are taking advantage of.
• Wall Street analysts may have to shift their ratings soon, as these forecasts become a reality in the future.
• Short sellers could be forced to close their positions and create additional buying pressure.

There is no denying that the technology sector in the United States has taken most of the attention over the past couple of years in the U.S. stock market. Not only is the attention aspect present, but the S&P 500 also has a significant weighting, leading to an overconcentration of capital in the current narratives surrounding artificial intelligence and trade tariffs.

As a net result, this has left other industries and excellent companies behind, creating an opportunity for savvy investors to realize that plenty of upside opportunities still exist and can be taken advantage of today. What’s more, investors don’t have to dismiss the tailwinds currently going on in the data center buildout across the country or any of the commercial construction infrastructure spending that is also going on.

For this reason, a rotation back to fundamentals might be in place, which is exactly where shares of Cleveland-Cliffs Inc. NYSE: CLF come into play to offer investors an undervalued shot at turning their portfolios into new highs before 2025 is over. Based on fundamental valuations and future growth expectations, this stock could be ready for a new bull run.

What Markets Have to Say About Cleveland-Cliffs

Now that the stock trades at only 73% of its 52-week high levels, investors need to consider a few assumptions to justify a potential buy in this beaten-down name. As most know, the market typically prices a stock based on future expectations, hence the forward-looking nature of financial markets.

With this in mind, two aspects of this company should be kept front and center when developing a potential buy thesis. First is the MarketBeat consensus for Cleveland-Cliffs to report 13 cents in earnings per share (EPS) by the first quarter of 2026.

This forecast would represent a significant jump from today’s reported net loss of 68 cents, which is enough to send a stock flying through new highs. 

The second aspect of this bull case is that, at today’s forward price-to-earnings (P/E) valuations, markets have yet to begin pricing in this future growth.

This presents an opportunity for investors to position themselves early, ahead of future sentiment revisions and reactions for the company. This can be quantified through the widely followed price-to-earnings-growth (PEG) ratio, where any reading below 1.0x implies a lot more growth to be priced into a company.

At a PEG of 0.5x, the implication is that Cleveland-Cliffs stock needs to rally to price in the 50% of EPS growth that isn’t there today, a vacuum investors could fill with an early positioning. This might also explain why some savvy institutional investors have recently decided to step into the stock for some exposure.

Those from State Street Corp. boosted their Cleveland-Cliffs holdings by 20.2% as of mid-August 2025, bringing their entire position to a high of $208.6 million today, or 5.5% ownership in the whole company. Investors can see this as confirmation of these EPS forecasts, as institutions typically rely on financial projections that are grounded in reality.

Institutional Support May Shift Analyst Sentiment on CLF

The Wall Street consensus for Cleveland-Cliffs stock is a Hold, targeting the company’s value at only $10.9 per share, or 4.5% additional upside. However, this may not reflect the stock's true potential, which is understandable since analysts typically focus on better-performing (or more popular) stocks in their ratings.

However, the confirmation from the institutional side could sway analysts away from their potentially conservative views once a rotation back to fundamentals takes place, benefiting beaten-down stocks like Cleveland-Cliffs. More than that, there is enough bearish positioning to trigger a short squeeze.

With $853.9 million worth of short positions open for this stock, or 16.7% of the entire float, the pendulum is set for one extreme enough to force this balance to be closed at a loss should the stock rally on these forecasts becoming a reality. Closing a short position involves buying the stock, which creates additional momentum and buying pressure.

Now, investors need to determine where the funding will come from. First, the development of EPS growth centers and semiconductor manufacturing facilities across the United States will require substantial raw materials like steel, which is where Cleveland-Cliffs plays a role.

Beyond that demand, current tariffs with steel trading partners could make it more appealing for domestic projects to depend on domestic steel, reducing some of these additional trading costs. All told, Cleveland-Cliffs has the right components to close down this growth gap, price it in, and deliver a new rally for its shareholders in the coming quarters.