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Top Steel Stocks for Q2 2022

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The steel industry is part of the basic materials sector and consists of companies involved in steel production, mining, and related activities. Although steel historically has been a major U.S. industry, the number of steel mills that produce the metal has declined sharply in the past several decades due to foreign competition. Some of the big names in the global steel industry include U.K.-based Rio Tinto PLC, Brazil-based Vale SA, and Reliance Steel & Aluminum Co.

Steel demand rebounded more than expected in 2021, rising by 4.5%. The World Steel Association forecasts that steel demand will continue to increase this year, but at a much slower pace, rising 2.2%. The global steel industry is facing pressure to increase production as Europe moves to ban key Russian iron ore and steel products in response to Russia’s invasion of Ukraine in February. Steel shipments to Europe already have fallen due to sanctions on Russian steel oligarchs.

Steel stocks, as represented by the VanEck Vectors Steel ETF (SLX), outperformed the broader market in the past year. SLX’s total return was 20.8% compared to the Russell 1,000 Index’s total return of 5.9%. These figures and all statistics in the tables below are as of March 15, 2022.

Here are the top 3 steel stocks with the best value, the fastest growth, and the most momentum.

Best Value Steel Stocks

These are the steel stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Steel Stocks
 
Price ($)
Market Cap ($B)
12-Month Trailing P/E Ratio
Mechel PAO (MTL)
2.25
0.6
0.6
EVRAZ PLC (EVRZF)
1.22
1.8
0.6
Ternium SA (TX)
39.73
7.8
2.0

Source: YCharts

Mechel PAO: Mechel PAO is a Russia-based mining, steel, and power company. The company produces semi-finished steel, coke, iron ore, chemical products, and electricity.EVRAZ PLC: EVRAZ is a U.K.-based vertically integrated steel, mining and vanadium company. It produces steel beams, reinforcement bars, railroad rails, and similar products. It operates in Russia, the U.S., Canada, the Czech Republic, and Kazakhstan. On March 11, the company announced that it would suspend the process of the demerger of its coal assets under PJSC Raspadskaya indefinitely. The reason for the suspension is that EVRAZ is awaiting clarification regarding regulatory restrictions, including related to sanctions imposed by the U.K.Ternium SA: Ternium is a Luxembourg-based company that manufactures and processes steel products used in a broad range of industries including automotive, home appliances, energy, capital goods, and construction. Ternium announced on Feb. 24, that it would invest approximately $1 billion in new finishing lines, a new cold rolling mill, and other advancements to its Pesquería industrial center in Mexico. The aim of the investment program is to broaden Ternium’s value-added product portfolio.

Fastest Growing Steel Stocks

These are the top steel stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest Growing Steel Stocks
 
Price ($)
Market Cap ($B)
EPS Growth (%)
Revenue Growth (%)
United States Steel Corp. (X)
32.05
8.4
1,600
119.4
Cleveland-Cliffs Inc. (CLF)
25.34
13.3
1,110
137.0
Olympic Steel Inc. (ZEUS)
29.32
0.3
1,250
88.4

Source: YCharts

United States Steel Corp.: United States Steel is an American-based manufacturer and seller of steel products. It operates through three business segments: Flat-Rolled Products, U.S. Steel Europe, and Tubular Products. On Feb. 15, the company announced that Christine S. Breves, senior vice president and chief financial officer (CFO), would leave the company in 2022. Breves will continue to serve as CFO while the company conducts a search for a permanent replacement. The exact date of her departure as well as her successor were not named.
Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. The company also supplies stainless steel tubing and other products. Cleveland-Cliffs reported results for Q4 2021 on Feb. 11. For that period, the company saw net income grow more than 12-fold, while revenues rose 136.9% year-over-year (YOY), driven in part by strong performance in the steelmaking business. Cleveland-Cliffs also announced a share buyback program that authorizes the company to buy back a maximum of $1 billion worth of shares.
Olympic Steel Inc.: Olympic Steel is a processor and distributor of flat-rolled carbon, stainless, and tubular steel products. The company serves as an intermediary between steel producers and manufacturers utilizing steel in their operations.

Steel Stocks with the Most Momentum

These are the steel stocks that had the highest total return over the last 12 months.

Steel Stocks with the Most Momentum
 
Price ($)
Market Cap ($B)
12-Month Trailing Total Return (%)
Nucor Corp. (NUE)
135.52
36.5
98.5
TimkenSteel Corp. (TMST)
19.96
0.9
85.0
Stelco Holdings Inc. (STLC.TO)
47.42
3.5
79.3
Russell 1,000
N/A
N/A
5.9
VanEck Vectors Steel ETF (SLX)
N/A
N/A
20.8

Source: YCharts

Nucor Corp.: Nucor manufacturers steel and steel products, with operations in the United States, Canada, and Mexico. Nucor also brokers ferrous and non-ferrous metals and pig iron, supplies ferro-alloys, and processes ferrous and nonferrous scrap. The company announced in late February that CFO, Treasurer, and Executive Vice President Jim Frias will retire effective June 11. He transitioned out of the role as of March 6. Steve Laxton, previously vice president of business development and strategic planning, will succeed Frias and is working with him during the transition period.TimkenSteel Corp.: TimkenSteel manufactures and sells steel and mechanical components including steel bars, bearings, seals, tubes, and chains. The company’s major customers are in the oil and gas, industrial, mining, construction, and power generation industries.
Stelco Holdings Inc.: Stelco Holdings is a Canada-based steelmaker that produces and sells steel products. Some of its products include flat-rolled value-added steels, pig iron, and metallurgical coke.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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World Steel Association. “Worldsteel Short Range Outlook October 2021.”

Bloomberg. “European Curbs on Russian Steel to Ramp Up Pressure on Industry.”

YCharts. “Financial Data.”

EVRAZ PLC. “Company.”

EVRAZ PLC. “Demerger update.”

Ternium SA. “Ternium to Broaden its Value-added Product Portfolio with New Investment Program at its Pesquería Industrial Center in Mexico,” Page 1.

United States Steel Corp. “U. S. Steel Announces Management Change.”

Cleveland-Cliffs Inc. “Cleveland-Cliffs Reports Full-Year and Fourth-Quarter 2021 Results and Announces $1 Billion Share Repurchase Program.”

Nucor Corp. “Nucor Chief Financial Officer Jim Frias to Retire; Steve Laxton to be Promoted.”

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