Unlocking the Power of Steel: Two Top Picks for a Stronger Portfolio
In the world of investing, identifying the right equities to buy is crucial. One effective approach is to focus on core economic sectors – industries that sustain the foundations of modern life. Among these, basic commodities like steel play a vital role, serving as the building blocks of countless essential activities.
The Backbone of Modern Life
Steel manufacturers are a sound choice, especially when economic forecasts start looking up. The automotive, machinery, and construction markets, to name just a few, all depend on steel. This makes steel producers a key component of a robust economy.
Goldman Sachs’ Positive Outlook
Goldman Sachs’ analyst Mike Harris is optimistic about the US steel industry, citing cyclical and structural factors that could drive earnings growth. He believes that steady demand, lower interest rates, fiscal stimulus, and favorable trade policy could all contribute to a brighter future for domestic steel producers.
Cleveland-Cliffs: A Steel Giant
Cleveland-Cliffs, the largest producer of flat-rolled steel in North America, is one of Harris’ top picks. With a rich history dating back to 1847, the company is involved in all aspects of the steel industry, from mining iron ore to processing ferrous scrap for steel recycling. Despite recent revenue and earnings declines, Harris sees potential for growth, citing successful execution of self-help initiatives, value-enhancing projects, and margin expansion potential.
Nucor: A Diversified Steel Powerhouse
Nucor, the largest US steelmaker, is another top pick. With a market cap of over $36 billion, the company is a diversified steel and steel product manufacturer with locations across the US, Canada, and Mexico. Despite recent declines in earnings and revenues, Harris believes Nucor is well-positioned to leverage incremental steel demand, driving margin uplift and solidifying its market-leading position.
What Sets These Stocks Apart
Both Cleveland-Cliffs and Nucor have received Buy ratings from Harris, with price targets implying significant upside potential. According to TipRanks, both stocks have Moderate Buy consensus ratings, with average target prices suggesting gains of 24% and 16%, respectively, over the next year.
Invest with Confidence
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights. Remember to always do your own analysis before making any investment.
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