5 Best Steel Stocks To Buy Today

In this article, we discuss 5 best steel stocks to buy today. If you want to see more stocks in this selection, check out 11 Best Steel Stocks To Buy Today. 

5. Vale S.A. (NYSE:VALE)

Number of Hedge Fund Holders: 27

Vale S.A. (NYSE:VALE) was founded in 1942 and is headquartered in Rio de Janeiro, Brazil. The company produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. Vale S.A. (NYSE:VALE) operates through Ferrous Minerals and Base Metals segments. On October 29, ​​the company reported a Q3 GAAP EPS of $0.98, beating market estimates by $0.37. 

On December 9, Morgan Stanley analyst Carlos De Alba upgraded Vale S.A. (NYSE:VALE) to Overweight from Equal Weight with a price target of $20, up from $14.50. China’s reopening will continue to be beneficial to miners, but the path forward will be “bumpy,” the analyst told investors in a research note. Additionally, share catalysts for a re-rating include a potential transaction that would “unlock value” from Vale S.A. (NYSE:VALE)’s base metals unit, contended the analyst.

According to Insider Monkey’s data, 27 hedge funds were long Vale S.A. (NYSE:VALE) at the end of the third quarter of 2022, and Rajiv Jain’s GQG Partners held the largest stake in the company, comprising 21.40 million shares worth $285 million.  

Here is what GMO LLC had to say about Vale S.A. (NYSE:VALE) in its Q1 2022 investor letter:

“Let’s look at Vale (NYSE:VALE), the world’s largest iron ore producer, as a case study for how shareholders can be rewarded. Vale’s stock price is about where it was at the beginning of last year. Despite the market’s lack of enthusiasm, the company generated about $20 billion of free cash flow last year. Not bad for a company with a market cap of a little over $100 billion and no substantive debt as of the end of March. 4 What did the company do with all that cash? Last year, Vale paid out about $9 billion in regularly scheduled dividends and distributed another $10 billion between extra dividends and share repurchases. Combined with dividends distributed in the first quarter of this year and a recently announced share repurchase, Vale has returned or announced the return of over $33 billion since the beginning of last year, almost a 32% yield relative to the market cap of the company. Not a bad way to win.”

4. Reliance Steel & Aluminum Co. (NYSE:RS)

Number of Hedge Fund Holders: 28

Reliance Steel & Aluminum Co. (NYSE:RS) is a California-based company that operates as a diversified metal solutions provider in the United States, Canada, and internationally. The company distributes alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, specialty steel products, non-ferrous metals products, tubular building products, manufactures specialty extruded metals, fabricated parts, and welded components. 

Reliance Steel & Aluminum Co. (NYSE:RS) is one of the best steel stocks to invest in. After posting market-beating Q3 results, Reliance Steel & Aluminum Co. (NYSE:RS) estimates non-GAAP earnings per diluted share in the range of $4.30 to $4.50 for the fourth quarter of 2022 versus a consensus of $4.22.

On November 22, KeyBanc analyst Philip Gibbs raised the price target on Reliance Steel & Aluminum Co. (NYSE:RS) to $225 from $210 and kept an Overweight rating on the shares. The analyst observed that Reliance Steel & Aluminum Co. (NYSE:RS) is the highest-quality, most defensive company in the sector amid robust recurring FCFE, industry-leading margins, a resilient history of adding long-term shareholder value, and infrastructure optionality.

According to Insider Monkey’s Q3 data, 28 hedge funds were bullish on Reliance Steel & Aluminum Co. (NYSE:RS), compared to 27 funds in the prior quarter. Donald Yacktman’s Yacktman Asset Management is the largest position holder in the company, with 1.25 million shares worth $219.5 million. 

3. Steel Dynamics, Inc. (NASDAQ:STLD)

Number of Hedge Fund Holders: 28

Steel Dynamics, Inc. (NASDAQ:STLD) is headquartered in Fort Wayne, Indiana, and the company is a steel producer and metal recycler in the United States. It operates through three segments – Steel Operations, Metals Recycling Operations, and Steel Fabrication Operations. On November 11, Steel Dynamics, Inc. (NASDAQ:STLD) declared a $0.34 per share quarterly dividend, in line with previous. The dividend is distributable on January 13, 2023 to shareholders of record on December 31.

On November 14, BMO Capital analyst David Gagliano raised the price target on Steel Dynamics, Inc. (NASDAQ:STLD) to $100 from $89 and kept a Market Perform rating on the shares. The analyst cited the company’s $1.5 billion buyback, stating that while the decision comes amid declining estimates and increasing capex, Steel Dynamics, Inc. (NASDAQ:STLD) has sufficient cash. The analyst added that the company should remain free cash flow generative in the coming years. The buyback is an optimistic signal that the balanced capital return strategy will continue, the analyst noted.

Among the hedge funds tracked by Insider Monkey, 28 funds were long Steel Dynamics, Inc. (NASDAQ:STLD) at the end of Q3 2022, compared to 29 funds in the prior quarter. Cliff Asness’ AQR Capital Management is the largest stakeholder of the company, with 1.5 million shares worth approximately $110 million. 

2. Algoma Steel Group Inc. (NASDAQ:ASTL)

Number of Hedge Fund Holders: 39

Algoma Steel Group Inc. (NASDAQ:ASTL) is a Canadian firm that produces and sells steel products primarily in North America. It provides flat/sheet steel products, including temper rolling, cold rolled, hot-rolled pickled and oiled products, floor plate, and cut-to-length products. On November 28, Algoma Steel Group Inc. (NASDAQ:ASTL) declared a $0.05 per share quarterly dividend, in line with previous. The dividend is payable on December 30, to shareholders of record on November 30. 

On November 21, Stifel analyst Ian Gillies raised the firm’s price target on Algoma Steel Group Inc. (NASDAQ:ASTL) to C$10.75 from C$10.25 and maintained a Hold rating on the shares.

According to Insider Monkey’s Q3 database, 39 hedge funds were long Algoma Steel Group Inc. (NASDAQ:ASTL), compared to 45 funds in the prior quarter. Jon Bauer’s Contrarian Capital is the largest stakeholder of the company, with 7.50 million shares worth $48.30 million. 

Here is what Nordstern Capital has to say about Algoma Steel Group Inc. (NASDAQ:ASTL) in its Q3 2022 investor letter:

“The world is short on raw materials and energy. Nordstern Capital has increased its exposure to raw materials and energy. Recession fears may temporarily suppress demand and prices. The fundamental issue, however, is a sustainable lack of supply, caused by decade-long underinvestment. The shortages cannot be resolved in the short to medium term.

Currently suppressed stock prices offer a wonderful opportunity for our commodity businesses to buy back their own shares. For instance, Algoma Steel Group (NASDAQ:ASTL) reduced its diluted share count this year from 177 million to 111 million. Nonetheless, ASTL’s share price has come down 50%, because US HRC steel prices per ton declined in the past year from $2,000 to currently $713. Today, ASTL has $500m in net cash and a market capitalization of about $700m. The company is profitable even in the current recessionary environment. The CFO expects annual mid-cycle free cash flow generation greater than the current ASTL enterprise value. This is one illustrative example. ASTL is not alone. Many present-day commodity businesses are cash and earnings rich and can use weak stock prices for aggressive buybacks.”

1. Nucor Corporation (NYSE:NUE)

Number of Hedge Fund Holders: 41

Nucor Corporation (NYSE:NUE) is a North Carolina-based company that manufactures and sells steel and steel products. The company operates through Steel Mills, Steel Products, and Raw Materials segments. It is one of the best steel stocks to consider. On October 20, Nucor Corporation (NYSE:NUE) reported its Q3 results, announcing earnings per share of $6.50 and a revenue of $10.50 billion, outperforming Wall Street estimates by $0.08 and $141.30 million, respectively. 

On December 6, UBS analyst Andreas Bokkenheuser raised the price target on Nucor Corporation (NYSE:NUE) to $145 from $120 and kept a Neutral rating on the shares as part of a broader research note on Americas Steel. High profitability continues to drive shareholder cash returns while declining raw materials costs also add further support to metal spreads, the analyst told investors in a research note.

According to Insider Monkey’s data, 41 hedge funds were bullish on Nucor Corporation (NYSE:NUE) at the end of Q3 2022, compared to 32 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the biggest stakeholder of the company, with 1.2 million shares worth $131 million. 

Here is what Madison Funds has to say about Nucor Corporation (NYSE:NUE) in their Q1 2021 investor letter:

“This quarter we are highlighting Nucor (NUE) as a relative yield example within the Materials sector. NUE is a leading manufacturer of steel and steel products. It is the largest steelmaker in the U.S. based on production volume with a vertically integrated business model. The company has a low fixed-cost position due to its use of electric arc furnaces, which are cleaner, less labor and energy-intensive than blast furnaces, and this results in low total costs per unit of steel produced. Our view is that a low cost position is an important attribute in a commodity business. NUE’s historical financial record supports this view as it has been profitable every year except for one over the past fifty years, unlike many steel producing peers. In addition, the company has a diverse product and mill portfolio that takes market share over time. We believe its scale, low fixed-cost position, consistent record of profitability and diverse mill portfolio result in a sustainable competitive advantage versus peers.

Our thesis on NUE is that it should benefit from higher steel prices as the U.S. economy recovers from the downturn caused by the Covid-19 pandemic. The company may also be a beneficiary of on-shoring, where manufacturing returns to the United States. These two dynamics should drive growth this year, and if the United States Congress passes new infrastructure legislation, that will provide another avenue for growth longer-term.” (Click here to read full text)

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