We came across a bullish thesis on United States Steel Corporation (X) on wallstreetbets Subreddit Page by Varro35. In this article, we will summarize the bulls’ thesis on X. United States Steel Corporation (X)’s share was trading at $37.93 as of Feb 20th. X’s trailing and forward P/E were 24.87 and 15.02 respectively according to Yahoo Finance.
An aerial view of an industrial plant manufacturing welded pipes and tubes from stainless steel and galvanized carbon.
United States Steel (X) is positioned at a crucial inflection point as macroeconomic and geopolitical factors align in its favor. The company has just completed a major CAPEX cycle, with Big River 2 coming online, a facility that would cost $10 billion to build today, reinforcing X’s competitive position. Meanwhile, the steel industry faces unprecedented tailwinds. U.S. GDP growth remains solid at 2.3% in Q4, and manufacturing PMI data has turned positive for the first time in nearly two years. The recently implemented steel tariffs, which extend beyond raw steel to downstream products, are far more comprehensive than those in 2018, adding an additional layer of protection for domestic producers. At the same time, oligopolistic market conditions favor the Big Four steelmakers and Cleveland-Cliffs (CLF), enhancing pricing power, especially in the auto sector. Rising scrap prices further strengthen the bullish case for U.S. steelmakers. However, the key risk remains China’s steel exports, which surged to 110.72 million metric tons in 2024, up 22.7% year-over-year. If China reduces steel exports due to economic stabilization, the global steel market would tighten, further benefiting U.S. producers.
The potential acquisition of U.S. Steel presents multiple scenarios, each with distinct valuation implications. A full Nippon Steel buyout could command $55 per share, while a joint venture between Nippon, CLF, and Nucor (NUE) could reach a similar valuation. Alternatively, a standalone X could see its stock rise to $49+, and a liquidation scenario could unlock $65+ per share. The ongoing Ukraine war adds another variable, with a potential resolution benefiting X’s massive Slovakian operations. Despite concerns about broader market conditions, high treasury yields, and a weak pre-tariff steel market, X’s strategic positioning, protectionist policies, and industry discipline create a compelling investment case. If demand restocking accelerates alongside a Trump victory and continued economic growth, the stock could see significant upside, with any sector rotation amplifying gains.
United States Steel Corporation (X) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held X at the end of the third quarter which was 57 in the previous quarter. While we acknowledge the risk and potential of X as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than X but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.