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The steel industry is part of the basic materials sector and consists of companies involved in steel production, mining, and related activities. Although steel historically has been a major U.S. industry, the number of steel mills that produce the metal has declined sharply in the past several decades due to foreign competition. Some of the big names in the global steel industry include U.K.-based Rio Tinto PLC (RIO), Brazil-based Vale SA (VALE), and Reliance Steel & Aluminum Co. (RS).
Steel demand rebounded more than expected in 2021, rising by 4.5%. The World Steel Association forecasts that steel demand will continue to increase this year, but at a much slower pace, rising 2.2%.
Steel stocks, as represented by the VanEck Vectors Steel ETF (SLX), slightly underperformed the broader market in the past year. SLX’s total return was 20.4% compared to the Russell 1,000 Index’s total return of 23.0%. These figures and all statistics in the tables below are as of Jan. 11, 2022.
Here are the top 3 steel stocks with the best value, the fastest growth, and the most momentum.
These are the steel stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Source: YCharts
- Mechel PAO: Mechel PAO is a Russia-based mining, steel, and power company. The company produces semi-finished steel, coke, iron ore, chemical products, and electricity.
- United States Steel Corp.: United States Steel is an American-based manufacturer and seller of steel products. It operates through three business segments: Flat-Rolled Products, U.S. Steel Europe, and Tubular Products. On Jan. 11, the company announced that it plans to break ground during the first quarter of 2022 on a $3 billion project to build a next-generation, technologically advanced steelmaking facility in Arkansas. When completed by 2024, the new steelmaking facility in combination with Big River Steel will create a 6.3 million ton mega mill capable of providing the most advanced and sustainable steel in North America.
- Ternium SA: Ternium is a Luxembourg-based company that manufactures and processes steel products used in a broad range of industries including automotive, home appliances, energy, capital goods, and construction. In its Q3 2021 report on Nov. 2, 2021, the company said net sales more than doubled to $4.6 billion, helping the company to post a net income of $1.4 billion.
These are the top steel stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
Source: YCharts
- Companhia Siderurgica Nacional: Companhia Siderurgica Nacional is a Brazilian company that operates through the steel, mining, cement, logistics, and energy business segments. The company’s steel segment has historically been its strongest area of operation.
- Nucor Corp.: Nucor manufacturers steel and steel products, with operations in the United States, Canada, and Mexico. Nucor also brokers ferrous and non-ferrous metals and pig iron, supplies ferro-alloys, and processes ferrous and nonferrous scrap. On Dec. 15, 2021, Nucor forecast that its Q4 2021 earnings will be its highest quarterly earnings in history. Nucor also forecast that all of 2021 would be its most profitable year ever, and that profits will be strong in 2022.
- Stelco Holdings Inc.: Stelco Holdings is a Canada-based steelmaker that produces and sells steel products. Some of its products include flat-rolled value-added steels, pig iron, and metallurgical coke. The company’s EPS went from negative to positive in the latest quarter, so there is no percent number for its performance in the table above.
These are the steel stocks that had the highest total return over the last 12 months.
Source: YCharts
- TimkenSteel Corp.: TimkenSteel manufactures and sells steel and mechanical components including steel bars, bearings, seals, tubes, and chains. The company’s major customers are in the oil and gas, industrial, mining, construction, and power generation industries. On Dec. 20, 2021, the company’s board of directors authorized a program allowing the company to buy back up to $50 million of the company’s outstanding stock. The board also approved an increase in the company’s capital budget expenditure budget to $40 million for FY 2022.
- Nucor Corp.: See above for company description.
- Commercial Metals Co.: Commercial Metals Co. manufacturers, recycles, and fabricates steel and metal products. On Jan. 10, the company reported Q1 FY2022 financial results for the quarter ending Nov. 30. Net earnings rise nearly fourfold as net sales surged to $2 billion from $1.4 billion in the same quarter a year earlier. On Jan. 6, the board of directors also declared a quarterly dividend of $0.14 per share payable on Feb. 3, 2022 to shareholders on record as of Jan. 20.
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