Stock Market News – Buy U.S. Steel Stock Because This Market Cycle Will Be ‘Stronger for Longer’
United States Steel
has gotten a fresh lift after another Wall Street firm predicted strength for the sector despite spectacular gains for steel prices.
Morgan Stanley analyst Carlos de Alba upgraded U.S. Steel (ticker: X) to Buy from Hold in a Monday report, raising his target for the stock price to $32 a share from $24. In early afternoon trading on Tuesday, U.S. Steel stock was up 3.5% to $28.42.
Higher steel prices are the biggest reason for the rally. Futures prices for hot-rolled coil—a key benchmark—have risen about 50% year to date to more than $1,500 a ton, the highest levels recorded in more than a decade.
De Alba believes steel fundamentals—the balance between supply and demand— will be “stronger-for-longer,” justifying the upgrade. He now projects prices for hot-rolled steel will average $1,273 a ton in 2021, up from $1,047.
His peers are also embracing the stronger-for-longer view. This past week, Credit Suisse analyst Curt Woodworth upgraded U.S. Steel stock to Buy from Hold as well.
(NUE) are near record highs. Both companies make steel primarily by melting scrap in electric furnaces, a lower-cost method, so their shares tend to move together.
U.S. Steel and
(CLF), meanwhile, make steel mainly by converting iron ore to pig iron in huge blast furnaces. They produce steel from the pig iron later in the process. Those two stocks tend to trade in similar patterns as well.
Cliffs stock was up about 2% in midday trading.
and Nucor shares were down, along with the overall market.
Write to Al Root at [email protected]