In this article, we discuss 11 best steel stocks to buy today. If you want to see more stocks in this selection, check out 5 Best Steel Stocks To Buy Today.
The World Steel Association released its Short Range Outlook on April 14, and it expects steel demand to increase 0.4% in 2022 to 1.84 billion mt and grow 2.2% in 2023 to 1.88 billion mt. World Steel Director General Edwin Basson told the press on April 14:
“We expect growth to start coming in 2023 and this is on the presumption that the war in Ukraine will come to a conclusion sometime in this year and at least the end of this year we will begin to see a recovery in the steel use in those markets, but throughout our forecasts we have assumed that steel use in Russia and Ukraine is going to be way down from previous years, and that the impact will flow over.”
Executives at top steel firms including United States Steel Corporation (NYSE:X), Nucor Corporation (NYSE:NUE), and Cleveland-Cliffs Inc. (NYSE:CLF) believe that tight supply chains in the automotive industry will eventually ease in 2023, driving demand and positive cash flows. These executives observed that energy, appliances, and automotive end markets will demand more steel next year, which is an optimistic catalyst for the industry. The steel executives were also confident that fixed contract tons recently negotiated for 2023 will safeguard their businesses against market turbulence.
Leon Topalian, Nucor president and CEO, said in a statement:
“During the third quarter, Congress passed the CHIPS Act and the Inflation Reduction Act, two pieces of legislation that will strengthen domestic manufacturing and create opportunities in the future for the American steel industry. We expect to start seeing the impacts of new federal infrastructure spending in 2023 as states continue to move forward with their projects.”
Our Methodology
We selected the following steel stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
Best Steel Stocks To Buy Today
11. Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP)
Number of Hedge Fund Holders: 5
Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP) is a Pennsylvania-based company that manufactures and markets semi-finished and finished specialty steel products in the United States and internationally. Its products include stainless steel, nickel alloys, tool steel, and other alloyed steels. Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP)’s Q3 2022 revenue of $46.19 million climbed 24.3% year-over-year, in-line with Wall Street estimates.
On November 18, Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP) announced a base price increase of 7% to 12% on bar products. The increase went into effect immediately. Present material and energy surcharges will remain in effect.
Like United States Steel Corporation (NYSE:X), Nucor Corporation (NYSE:NUE), and Cleveland-Cliffs Inc. (NYSE:CLF), Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP) is one of the best steel stocks to invest in.
10. Schnitzer Steel Industries, Inc. (NASDAQ:SCHN)
Number of Hedge Fund Holders: 12
Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) was founded in 1906 and is headquartered in Portland, Oregon. The company recycles ferrous and nonferrous metal, and manufactures finished steel products worldwide. Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) also acquires, processes, and recycles salvaged vehicles, rail cars, home appliances, industrial machinery, manufacturing scrap, and construction and demolition materials.
On October 24, Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) reported a FQ4 non-GAAP EPS of $0.50 and a revenue of $894.41 million, outperforming Wall Street consensus by $0.04 and $76.81 million, respectively. Revenue over the period climbed 5.8% on a year-over-year basis.
Goldman Sachs analyst Emily Chieng on October 6 maintained a Buy rating on Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) but lowered the firm’s price target on the shares to $39 from $45. While soft market conditions are resulting in price and demand weakness in the ferrous scrap markets, the longer-term fundamentals for scrap remain attractive, due to structural shifts from blast furnaces to electric arc furnaces, the analyst told investors in a research note.
According to the third quarter database of Insider Monkey, 12 hedge funds were bullish on Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), with collective stakes worth $26.2 million. Eric Sprott’s Sprott Asset Management is the leading position holder in the company, with 264,600 shares valued at $7.5 million.
9. Worthington Industries, Inc. (NYSE:WOR)
Number of Hedge Fund Holders: 14
Worthington Industries, Inc. (NYSE:WOR) is an industrial manufacturing company that specializes in value-added steel processing, manufactured consumer, building, and sustainable mobility products in North America and internationally. It operates through Steel Processing, Consumer Products, Building Products, and Sustainable Energy Solutions segments. Worthington Industries, Inc. (NYSE:WOR) is one of the best steel stocks to buy now.
BMO Capital analyst Katja Jancic on September 30 maintained a Market Perform rating on Worthington Industries, Inc. (NYSE:WOR) and lowered the price target on the shares to $52 from $58 after its Q1 results. In the short-term, Worthington Industries, Inc. (NYSE:WOR) is facing headwinds given a sharp decline in steel prices and inflationary challenges, but over the longer-term, Worthington Industries, Inc. (NYSE:WOR)’s plan to split into two does offer the chance to unlock value, the analyst told investors in a research note. The analyst added however that the near-term headwinds and the higher likelihood of a more conservative capital allocation strategy warrant a neutral stance.
According to Insider Monkey’s data, 14 hedge funds were long Worthington Industries, Inc. (NYSE:WOR) at the end of the third quarter of 2022, with collective stakes worth $23.50 million. Ken Griffin’s Citadel Investment Group held the largest position in the company, with 119,894 shares worth $4.5 million.
8. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 20
BHP Group Limited (NYSE:BHP) was established in 1851 and is headquartered in Melbourne, Australia. It operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. BHP Group Limited (NYSE:BHP) has three segments – Copper, Iron Ore, and Coal. It engages in the mining of copper, silver, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and energy coal. Metallurgical coal is a key component in the steel-making process.
On November 23, BofA analyst James Redfern upgraded BHP Group Limited (NYSE:BHP) to Buy from Neutral with a price target of A$47.50, up from A$45, stating that his higher target primarily reflects a more optimistic view on copper.
According to Insider Monkey’s Q3 data, 20 hedge funds were bullish on BHP Group Limited (NYSE:BHP), compared to 19 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the biggest position holder in the company, with 17.6 million shares worth $881.2 million.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and BHP Group Ltd. (NYSE:BHP) was one of them. Here is what the fund said:
“Our purchase of Australian mining company BHP Group Ltd. (NYSE:BHP) is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
7. Commercial Metals Company (NYSE:CMC)
Number of Hedge Fund Holders: 20
Commercial Metals Company (NYSE:CMC) is a Texas-based company that manufactures, recycles, and fabricates steel and metal products in the United States, Poland, China, and internationally. The company processes and sells ferrous and nonferrous scrap metals to steel mills and foundries, aluminum sheet manufacturers, brass and bronze ingot makers, copper refineries and mills, specialty steel mills, high temperature alloy manufacturers, and other consumers. Commercial Metals Company (NYSE:CMC) is one of the premier steel stocks to monitor.
On October 13, Commercial Metals Company (NYSE:CMC) posted a FQ4 non-GAAP EPS of $2.45 and a revenue of $2.4 billion, outperforming Wall Street estimates by $0.22 and $40 million, respectively. Revenue over the period jumped 18.2% on a year-over-year basis.
BMO Capital analyst David Gagliano on October 14 raised the price target on Commercial Metals Company (NYSE:CMC) to $43 from $37 but kept a Market Perform rating on the shares after its FQ4 earnings beat. Macro headwinds are starting to weigh on the company’s overall results and short-term outlook, but Commercial Metals Company (NYSE:CMC) is positioned to deliver relatively strong results, as ongoing stability in the American construction pipeline and backlog mitigate the headwinds in its Poland operations, the analyst told investors in a research note.
According to Insider Monkey’s Q3 data, 20 hedge funds were bullish on Commercial Metals Company (NYSE:CMC), compared to 23 funds in the prior quarter. Bruce Berkowitz’s Fairholme (FAIRX) held the largest stake in the company, with 2.3 million shares worth $84.3 million.
Here is what Fairholme Capital Management specifically said about Commercial Metals Company (NYSE:CMC) in its Q2 2022 investor letter:
“Commercial Metals Company (NYSE:CMC) recycles scrap into rebar essential for the strengthening of concrete found everywhere. CMC is priced at five times estimated earnings and pays a 1.6% dividend that I expect to grow with profits. To better understand the Fund’s recent infrastructure investments, I recommend Vaclav Smil’s How the World Really Works.”
6. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 26
Rio Tinto Group (NYSE:RIO) is a London-based company engaged in exploring, mining, and processing mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and lithium. Customers use Rio Tinto Group (NYSE:RIO)’s iron ore to produce steel.
On November 30, investment advisory Jefferies added Rio Tinto Group (NYSE:RIO) to the firm’s “Franchise Picks” list, which represents a selection of the “most differentiated calls in liquid stocks.” Rio Tinto Group (NYSE:RIO) is well positioned to benefit from a rebound in Chinese economic growth, including stability in China’s troubled property markets, noted the firm, while keeping a Buy rating and 6,700 GBp price target on Rio Tinto Group (NYSE:RIO) shares.
According to Insider Monkey’s data, Rio Tinto Group (NYSE:RIO) was part of 26 hedge fund portfolios at the end of Q3 2022, compared to 24 in the preceding quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a prominent position holder in the company, with approximately 6 million shares worth $326.6 million.
In addition to United States Steel Corporation (NYSE:X), Nucor Corporation (NYSE:NUE), and Cleveland-Cliffs Inc. (NYSE:CLF), Rio Tinto Group (NYSE:RIO) is one of the steel stocks favored by elite investors.
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Disclosure: None. 11 Best Steel Stocks To Buy Today is originally published on Insider Monkey.
