Goldman Sachs’ analyst Mike Harris predicts that the US steel sector will flourish with Donald Trump as President.
In a note to clients today, he said that lower interest rates and a steady demand would benefit the steel industry in Canada next year.
Analysts added that structural factors such as fiscal stimuli and favorable trade policies will also drive growth in earnings.
Harris suggests that you own Nucor, Cleveland-Cliffs and Commercial Metals Company.
Nucor Corp. (NYSE:NUE)
Mike Harris believes Nucor’s stock will rise to $190, which is a 22% increase from its current level.
In recent years, cheaper steel imports from China have hurt the US industry. But that is about to change as Donald Trump fulfills his pledge of increasing tariffs on imported goods.
Goldman Sachs anticipates Nucor’s growth to be at 15% compounded annualized. Goldman Sachs also anticipates that the Charlotte-based firm will see volume and price growth by 2025.
In October, the largest US steel producer reported a narrower-than-expected 15% decline in its revenue to $7.44 billion for its fiscal Q3.
Nucor’s shares are currently paying a dividend of 1.37%, which is another reason why you should own them.
Commercial Metals Company, Inc. (NYSE: CMC).
Goldman Sachs sees a potential upside of 20% for Commercial Metals shares at $75.
This Texas-based company will also benefit from Trump’s tariffs, just like NUE. According to investment firm, a robust supply-demand dynamic will also help boost its stock further this year.
Mike Harris predicts that CMC will grow its volume by 4.0% and increase prices by 2.0% annually.
Commercial Metals is expected to grow by a rate annualised of 9.0% in the future.
Commercial Metals is a good investment, even if it missed Street expectations for its earnings in the latest quarter reported. Sales were down on an annual basis.
CMC’s stock is even more appealing when paired with a dividend yield of 1.13%.
Cleveland-Cliffs Inc (NYSE: CLF)
Mike Harris’ $16 price objective on Cleveland-Cliffs translates into a roughly 23% increase from this point.
The only company on the list that does not pay dividends is this one.
Goldman Sachs analysts expect CLF’s growth to be 47% compounded annually over the next 2 years, which is faster than Nucor or Commercial Metals.
CLF can be used to increase the value of any additional US infrastructure and construction spending. This should also include successful cost-reduction and value enhancement projects.
The stock of Cleveland-Cliffs is appealing, especially because its valuation has dropped in recent months.
Shares of American Steel are currently down 45% compared to their high for the year.
Harris remains positive about CLF, despite the fact that both its top and bottom lines were weak in the recently completed quarter.
The post 3 US Steel Stocks that Will Benefit from Trump 2.0 will be updated as new information becomes available.
