5 Best Steel Stocks To Buy Today

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.”