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).

The industry is rebounding after a challenging 2020 due to the pandemic. Steel stocks, as represented by the VanEck Vectors Steel ETF (SLX), generated a higher return than the broader market over the last year. SLX's total return is 169.0%, more than double the total return of the Russell 1000 during the past 12 months. These figures and all statistics in the tables below are as of March 16.

Here are the top 3 steel stocks with the best value, the fastest growth, and the most momentum.

Best Value Steel Stocks

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.

Best Value Steel Stocks

 
Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Ternium SA ( TX) 36.85 7.2 9.5
Labrador Iron Ore Royalty Corp. ( LIF.TO) CA$40.00 CA$2.6 11.3
Commercial Metals Co. ( CMC) 28.32 3.4 13.1

Source: YCharts

  • 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. The company's Q4 2020 net income jumped more than seven-fold to $670.6 million from the same quarter a year earlier, with sales growing about 15% year-over-year (YOY). Ternium's profit was helped by a $186.0 million gain related to tax benefits.
  • Labrador Iron Ore Royalty Corp.: Labrador Iron Ore Royalty, headquartered in Canada, operates as an unincorporated open-ended trust. It owns a 15.1% interest in the Iron Ore Company of Canada (IOC), a North American producer of premium iron ore pellets and high-grade concentrate. Labrador Iron Ore Royalty receives royalties and commissions for iron ore produced, sold, and shipped by Iron Ore Company of Canada.
  • Commercial Metals Co.: Commercial Metals manufactures, recycles, and fabricates steel and metal products through mini-mills, micro-mills, steel fabrication, and processing plants in the U.S. and Europe.

Fastest Growing Steel Stocks

These are the steel stocks with the highest year-over-year (YOY) operating income, also called operating earnings, growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Operating income excludes non-operating income and expenses (such as investment gains or losses), one-time items, as well as interest and taxes. This helps investors get a clearer picture of the strength of the underlying business without the effect of unusual one-off events, such as large tax credits, asset sales, or lawsuit settlements. If you decided to invest in a company, it's still important to look at these one-off non-operating expenses and incomes, as they can still influence a company's overall financial health.

Fastest Growing Steel Stocks

 
Price ($) Market Cap ($B) Operating Income Growth (%)
Ternium SA (TX) 36.85 7.2 634.1
Companhia Siderurgica Nacional ( SID) 6.55 9.0 413.8
Gerdau SA ( GGB) 5.11 8.7 284.2

Source: YCharts

  • Ternium SA: See above for company description.
  • Companhia Siderurgica Nacional: Companhia Siderurgica Nacional is a Brazil-based steel manufacturer. It mines for iron ore and produces a variety of semi-finished steel products for use across multiple industries.
  • Gerdau SA: Gerdau is a Brazil-based steel manufacturer with facilities in 10 countries. Using recycled metal scrap to make steel, its products are used in industries including agriculture, energy, automotive, and manufacturing. Gerdau's Q4 2020 net income grew by about 10-fold compared to the same quarter a year earlier as sales increased by 43%. Gerdau's steel production rose by 14% YOY as the company and the industry continued their recovery.

Steel Stocks with the Most Momentum

These are the steel stocks that had the highest total return over the last 12 months.

Steel Stocks with the Most Momentum

 
Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Stelco Holdings Inc. ( STLC.TO) CA$26.50 CA$2.4 594.7
Companhia Siderurgica Nacional (SID) 6.55 9.0 371.8
Cleveland-Cliffs Inc. ( CLF) 15.92 7.9 306.4
Russell 1000 N/A N/A 74.3
VanEck Vectors Steel ETF (SLX) N/A N/A 169.0

Source: YCharts

  • Stelco Holdings Inc.: Stelco Holdings is a Canada-based company that produces hot rolled, cold rolled, and coated sheet steel products. These products are used in the construction, automotive, and energy industries. Its Q4 2020 loss nearly doubled compared to the previous year largely due to large losses on commodity-based swaps. Revenue dropped 3%.
  • Companhia Siderurgica Nacional: See above for company description.
  • Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and major supplier of iron ore pellets. It added scale last year when it purchased AK Steel and Arcelor Mittal USA. Cleveland-Cliffs completed the Arcelor Mittal deal in December, merging it with the AK Steel operations, to create a large steel production business.

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