Shares of steelmaker and miner Cleveland-Cliffs (NYSE: CLF) rose nearly 10% this week, according to data from S&P Global Market Intelligence. The stock had been treading water over the past several months until this surge.
Last week, Analyst Philip Gibbs of Keybanc downgraded the stock to the equivalent of a neutral rating. He cited valuation concerns, noting that major catalysts may be behind the company and costs are rising due to an evolving product mix. With shares up more than 50% in the last six months, good news may already be reflected in the price.
Yet steel stocks have been climbing. Increased demand from the infrastructure, construction, and automotive sectors, alongside supply side factors such as tariffs, is driving up prices and profit margins for domestic producers. Anticipation of economic recovery, possible interest rate reductions, and robust government infrastructure investment are boosting optimism and valuations for steel companies.
Shares of domestic peer Nucor have also been trending higher, jumping nearly 7% since the start of the year. This earnings season will be critical to see whether all domestic steelmakers are benefiting from robust demand or whether the gains are company-specific. That should determine the next moves for these stocks.
The Motley Fool Stock Advisor analyst team identified what they believe are the 10 best stocks for investors to buy now, and Cleveland-Cliffs was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004: if you invested $1,000 at the time of the recommendation, you’d have $474,578. Or when Nvidia made this list on April 15, 2005: if you invested $1,000 at the time of the recommendation, you’d have $1,141,628.
Stock Advisor’s total average return is 955%—a market-crushing outperformance compared to 196% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.