In this article, we will take a look at the 5 best steel stocks to invest in. To read our analysis of the recent trends and market activity, you can go to the 10 Best Steel Stocks to Invest In.
5. Algoma Steel Group Inc. (NASDAQ:ASTL)
Number of Hedge Fund Holders: 31
Ontario, Canada-based Algoma Steel Group Inc. (NASDAQ:ASTL) is a steel production company with an expertise in the production of hot and cold rolled steel sheet and plate products with a raw steel production capacity of nearly 2.8 million tons per year.
On June 21, Algoma Steel Group Inc. (NASDAQ:ASTL) released its financial results for the quarter ended March 31. It generated a revenue of C$677 million and a net loss of C$20 million. The company paid a quarterly dividend of C$0.05 per share during the quarter.
Algoma Steel Group Inc. (NASDAQ:ASTL) has the highest upside potential based on the average analyst target price of $12.40 which is 68.48% more than the share price on July 14.
4. Reliance Steel & Aluminum Co. (NYSE:RS)
Number of Hedge Fund Holders: 31
Scottsdale, Arizona-based Reliance Steel & Aluminum Co. (NYSE:RS) is a leading diversified metals solutions provider with a network of more than 300 locations across 40 states and 12 countries outside United States. It offers a full range of value-added metals products including galvanized, hot-rolled and cold-finished steel, stainless steel, aluminum, brass, copper, titanium and alloy steel, among others.
Reliance Steel & Aluminum Co. (NYSE:RS) has grown rapidly with intermittent acquisitions to bolster its product offerings and to expand its network. On May 1, the company announced that it had acquired Southern Steel Supply, LLC, a metals service center that supplies customers throughout Tennessee, Mississippi, Arkansas, Alabama, and Missouri. The target company generated FY 2022 net sales of $63 million.
On April 27, Reliance Steel & Aluminum Co. (NYSE:RS) released its financial results for Q1 2023. It generated a revenue of $4.0 billion and net income of $383 million. Its EPS for the quarter was $6.43, which exceeded consensus estimates by $0.81.
3. Steel Dynamics, Inc. (NASDAQ:STLD)
Number of Hedge Fund Holders: 33
Steel Dynamics, Inc. (NASDAQ:STLD) is one of the largest domestic steel producers and metals recyclers in the United States with facilities located throughout the United States, and in Mexico. It produces steel products, including hot roll, cold roll, and coated sheet steel, structural steel beams and shapes, rail, engineered special-bar-quality steel, and cold finished steel, among others.
Steel Dynamics, Inc. (NASDAQ:STLD) has paid regular quarterly cash dividends for more than a decade. During the last 10 years, its dividend payouts have grown at a CAGR of 14.47% and the company currently pays a quarterly cash dividend of $0.425 per common share.
As of Q1 2023, Steel Dynamics, Inc. (NASDAQ:STLD) shares were held by 33 hedge funds with a total value of $304 million. Cliff Asness’ AQR Capital Management was its largest hedge fund shareholder with ownership of 1.3 million shares valued at $142 million.
2. Cleveland-Cliffs Inc. (NYSE:CLF)
Number of Hedge Fund Holders: 34
Founded in 1847 as a mine operator, Cleveland-Cliffs Inc. (NYSE:CLF) is the largest flat-rolled steel producer and also the largest manufacturer of iron ore pellets in North America. The company is vertically integrated from mined raw materials, direct reduced iron, and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling, and tubing.
The management Cleveland-Cliffs Inc. (NYSE:CLF) has been making efforts to improve the financial position of the company as well as increase profitability. The company has managed to reduce its net debt and post-retirement liabilities by nearly 45% in the last 2 years.
On the profitability front, the steelmaking COGS has been reduced by $140 per ton while fixed-price auto contracts, which account for a significant portion of the company’s revenue, have been revised up by $115 per ton.
Cleveland-Cliffs Inc. (NYSE:CLF) is the second best steel stock to invest in based on hedge fund sentiment as 34 hedge funds held its shares with a total value of $379 million, as of Q1 2023. Ken Fisher’s Fisher Asset Management was the largest hedge fund shareholder with ownership of 8.2 million shares valued at $149 million.
1. Nucor Corporation (NYSE:NUE)
Number of Hedge Fund Holders: 39
Based in Charlotte, North Carolina, Nucor Corporation (NYSE:NUE) is a leading steel producer with more than 300 operating facilities primarily in North America. It operates 24 scrap-based steel mills that have an annual production capacity of more than 27 million tons per year. The company also processes nearly 20 million tons of ferrous scrap per year to produce new steel.
On June 15, Nucor Corporation (NYSE:NUE) provided guidance for its Q2 2023 financial results. The company expects earnings per share to be in the range of $5.45 to $5.55 per diluted share, as compared to the consensus estimate of $5.43 per share.
On July 5, Exane BNP Paribas analyst Seth Rosenfeld upgraded the rating on Nucor Corporation (NYSE:NUE) shares to ‘Outperform’ from ‘Neutral’ with a price target of $191. The target price represents a potential upside of 14.53% based on the share price on July 14.
Nucor Corporation (NYSE:NUE) is the best steel stock to invest in according to the number of hedge funds that held its shares as of March 31, 2023. The stock was owned by 39 prominent hedge funds out of the 943 tracked by Insider Monkey, with a total value of $440 million. Citadel Investment Group, Marshall Wace LLP, and AQR Capital Management were the top 3 hedge fund shareholders of the stock.
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