11 Best Steel Stocks To Buy Today

In this article, we discuss 11 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. 

Photo by Russ Ward on Unsplash

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. 

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)

You can also take a look at 10 Biggest Duty Free Companies in the World and Top 10 Semiconductor Manufacturing Countries in the World.

Suggested articles:

• 10 Best Transportation Stocks To Buy
• 10 Best Performing Country ETFs in 2022
• 10 Best Quantum Computing Stocks To Buy

Disclosure: None. 11 Best Steel Stocks To Buy Today is originally published on Insider Monkey.