Cleveland-Cliffs Inc. (CLF): A Bull Case Theory

We came across a bullish thesis on Cleveland-Cliffs Inc.  on r/wallstreetbets by politicalinvestor. In this article, we will summarize the bulls’ thesis on CLF. Cleveland-Cliffs Inc.’s share was trading at $13.36 as of January 13th. CLF’s trailing and forward P/E were 133.67 and 62.89 respectively according to Yahoo Finance.

Cleveland-Cliffs stands out as one of the very few steel companies that have not already delivered multi hundred percent returns over the past five years, creating an asymmetric setup as both company-specific and macro tailwinds begin to align.

After years of alternating bullish and bearish conditions, the company appears to be entering a decisive phase driven by structural changes rather than cyclical noise. A potential strategic investment from POSCO, estimated at a 10 to 20 % stake, could materially strengthen the balance sheet while validating Cliffs’ vertically integrated U.S. steel model.

Management has already taken meaningful action by idling or permanently closing at least six low margin facilities, with further rationalization likely, which should lift consolidated margins and reduce cash burn. Beyond steel, the company’s iron ore mining footprint presents a possible long term opportunity in rare earth extraction, an underappreciated asset that could become strategically important as the U.S. seeks to reduce reliance on foreign supply chains.

Tariffs continue to provide a direct boost to domestic pricing power, while a shifting rate environment adds another lever. With Chair Powell expected to exit in 2026, additional rate cuts could significantly ease Cliffs’ debt burden, especially when combined with proceeds from potential outside investments. On the demand side, interest free or subsidized auto financing would support vehicle production and steel intensity at a time when Cliffs is focused on higher value end markets.

Options activity after May allows for another earnings and filing cycle to confirm improving fundamentals. Even under pessimistic assumptions, upside toward $20 appears reasonable, while a favorable macro and execution scenario supports a move above $30. History suggests that a pro manufacturing policy backdrop could further amplify these gains.

Previously we covered a bullish thesis on Steel Dynamics, Inc. by Gregg Jahnke in February 2025, which highlighted operational efficiency, balance sheet strength, and long term value creation. The company’s stock price has appreciated by approximately by 27.82% since our coverage. This is because the thesis played out amid tariff dynamics and disciplined execution. Politicalinvestor shares a similar thesis on Cleveland-Cliffs Inc. but emphasizes balance sheet repair, macro tailwinds, and asymmetric upside.

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Disclosure: None.