What makes US Steel (X) stock a solid choice right now
Actions of United States Steel Company X have increased by around 34% since the start of the year. We are optimistic about the outlook for the company and believe the time has come for you to add the stock to the portfolio as it looks promising and is poised to build on its momentum.
US Steel currently has a Zacks # 1 (strong buy) rating and a VGM score of A. Our research shows that stocks with a VGM score of A or B, combined with a Zacks # 1 or 2 (buy) rating, offer the better investment opportunities for investors.
Let’s dig deeper into the factors that make this steelmaker an attractive choice for investors right now.
US Steel shares jumped 205.4% year-on-year against its industry’s 104.5% rise. It also outperformed the 32.6% rise in the S&P 500 over the same period.
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Over the past two months, Zacks’ consensus estimate for US Steel for 2021 has risen by about 22.9%. The consensus estimate for the third quarter of 2021 has also been revised upwards by 15.5% over the same period. The favorable estimate revisions inspire investor confidence in the stock.
Solid growth prospects
Zacks’ consensus estimate of $ 13.57 in 2021 profit for US Steel suggests year-over-year growth of 390.6%. In addition, profits are expected to grow 488.4% in the third quarter.
History of positive earnings surprise
US Steel has beaten Zacks’ consensus estimate in each of the past four quarters. During this period, it delivered a surprise profit of 25.1% on average.
US Steel recently announced optimistic forecasts for the third quarter of 2021. It expects record third quarter results thanks to its Best for All business model, solid reliability and quality performance, and continued demand from customers as well as a sustained increase in the selling prices of steel. The company expects Adjusted EBITDA to be around $ 2 billion, which suggests an increase from the second quarter figure of around $ 1.3 billion.
The Company’s Flat Rolled segment is expected to generate record third quarter EBITDA and EBITDA margin, driven by higher steel selling prices in its adjusted contracts, spot selling prices and strong continuous demand from customers. Segment assets continue to perform well, creating efficiencies across the segment and increasing segment profitability.
In the Mini Mill segment, third quarter EBITDA and EBITDA margin are expected to break last quarter records driven by higher steel selling prices and continued operating efficiencies.
The company also expects the European segment to post record EBITDA and EBITDA margin thanks to strong demand for steel and higher steel prices. The tubular segment is expected to benefit from higher prices and volumes, which will help offset the impact of inflated scrap input costs.
Steel prices in the United States have rebounded strongly and reached record levels after plunging to multi-year lows triggered by the pandemic in August 2020. The rebound was fueled by growing demand (particularly in the automotive and construction), tight supply conditions and higher raw material costs. . Hot-rolled coil (“HRC”) benchmark prices have more than quadrupled from lows seen in August 2020. HRC prices are currently hovering around the $ 2,000 per short ton level. Thus, rising domestic steel prices should act as a catalyst for US Steel.
United States Steel Corporation Price and Consensus
United States Steel Corporation price-consensus-chart | United States Steel Corporation quote
Actions to consider
Some other top-ranked actions worth considering in the basic materials space include Nucor Company NAKED, Nutrien Ltd. NTR and AdvanSix Inc. ASIX, each sporting a Zacks Rank # 1. You can see The full list of today’s Zacks # 1 Rank stocks here.
Nucor has a projected profit growth rate of 534.4% for the current year. The company’s shares have jumped about 129% in a year.
Nutrien has an expected profit growth rate of 173.9% for the current year. The stock also rebounded by around 68% year-on-year.
AdvanSix has a projected profit growth rate of 160.4% for the current year. The company’s shares have climbed about 212% in a year.
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