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 stocks, as represented by the VanEck Vectors Steel ETF (SLX), have slightly underperformed the broader market over the last year. SLX has provided a total return of 20.4%, below the Russell 1000's total return of 22.2% over the past 12 months, as of December 8, 2020. All statistics in the tables below are as of December 9.
Here are the top 3 steel stocks with the best value, the fastest growth, and the most momentum. In the growth category below, only two steel stocks had positive earnings growth while one had no growth. All other steel stocks that we looked at experienced earnings declines.
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|
|Commercial Metals Co. (CMC)||20.65||2.5||8.9|
|Labrador Iron Ore Royalty Corp. (LIF.TO)||CA$31.01||CA$2.0||9.9|
|Steel Dynamics Inc. (STLD)||38.40||8.1||16.9|
- Commercial Metals Co.: Commercial Metals works in steel, industrial minerals, ferroalloys, and other metals. The company is involved in manufacturing and recycling.
- Labrador Iron Ore Royalty Corp.: Labrador Iron Ore Royalty is a Canada-based company that operates as an unincorporated open-ended trust. It owns interests in the Iron Ore Company of Canada and holds an overriding royalty on all iron ore products produced, sold, delivered, and shipped by that company.
- Steel Dynamics Inc.: Steel Dynamics is a carbon steel producer and metals recycler. It offers a range of steel products, including flat-rolled steel sheets and structural beams. The company reported a 31.7% decline in net income as net sales fell 7.8% in Q3 2020, which ended September 30, 2020. Steel Dynamics said that steel demand has been negatively impacted by the COVID-19 pandemic but is starting to recover.
Fastest Growing Steel Stocks
These are the steel stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Steel Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Gerdau SA (GGB)||4.49||7.6||99.9|
|Ternium SA (TX)||31.10||6.1||40.0|
|Labrador Iron Ore Royalty Corp. (LIF.TO)||CA$31.01||CA$2.0||0.0|
- Gerdau SA: Gerdau is a Brazil-based steel manufacturer with operations in the Americas, Europe, and Asia. The company follows the practice of mini mill steel production, which recycles metal scrap to create steel products. Gerdau posted net income growth of 174.7% as net sales rose 23.1% in Q3 2020, which ended September 30, 2020. Lower general and administrative expenses, impairment of financial assets, and certain financial expenses compared to the year-ago quarter helped to boost net income. The company said that steel production is beginning to recover following the initial shock from the pandemic earlier this year.
- Ternium SA: Ternium is a Luxembourg-based company that manufactures and processes steel products such as slabs, billets and round bars, hot rolled flat products, merchant bars, and reinforcing bars. The company posted profit growth of 54.6% despite a 12.7% decline in net sales in Q3 2020, which ended September 30, 2020. Higher finance income and equity in earnings of non-consolidated companies compared to the year-ago quarter helped to boost profits. Cost of sales and certain expenses also fell at a slightly faster rate than net sales. Ternium said that the impact of the pandemic significantly lessened during the third quarter.
- Labrador Iron Ore Royalty Corp.: See above for company description.
Steel Stocks with the Most Momentum
These are the steel stocks that had the highest total return over the last 12 months.
|Steel Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Stelco Holdings Inc. (STLC.TO)||CA$18.45||CA$1.6||72.6|
|Cleveland-Cliffs Inc. (CLF)||13.04||5.2||64.0|
|Companhia Siderurgica Nacional (SID)||5.08||7.0||59.4|
|VanEck Vectors Steel ETF (SLX)||N/A||N/A||20.4|
- Stelco Holdings Inc.: Stelco Holdings is a Canada-based holding company that, through its subsidiaries, produces flat-rolled, coated, and cold-rolled steel products. Its products are used in the construction, automotive, and energy industries.
- Cleveland-Cliffs Inc.: Cleveland-Cliffs produces and mines iron ore, produces iron ore pellets, lumps, and other materials for use in the global steel industry. The company recently announced that it had completed its acquisition of Arcelor Mittal USA LLC and its subsidiaries, making Cleveland Cliffs the largest flat-rolled steel producer in North America. The deal was originally announced in late September with a transaction value of $1.4 billion.
- 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.
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YCharts. "Financial Data." Accessed Dec. 9, 2020.
Steel Dynamics Inc. "Steel Dynamics Reports Third Quarter 2020 Results." Accessed Dec. 10, 2020.
Gerdau SA. "Quarterly Results: 3Q20," Pages 2 & 18. Accessed Dec. 10, 2020.
Ternium SA. "Ternium Announces Third Quarter and First Nine Months of 2020 Results," Pages 3 & 9. Accessed Dec. 10, 2020.
Cleveland-Cliffs Inc. "Cleveland-Cliffs Inc. Completes Acquisition of ArcelorMittal USA." Accessed Dec. 10, 2020.
Cleveland-Cliffs Inc. "Cleveland-Cliffs Inc. to Acquire ArcelorMittal USA." Accessed Dec. 10, 2020.