Top Steel Stocks for Q3 2022

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, Brazil-based Vale SA, and Reliance Steel & Aluminum Co.

Steel demand increased by 2.7% in 2021. The World Steel Association forecasts that steel demand will continue to increase this year, but at a much slower pace, rising 0.4%. The ongoing Russian invasion of Ukraine has significantly disrupted the global steel industry. Both Russia and Ukraine have traditionally been among the largest steel exporters in the world.

Steel stocks, as represented by the VanEck Vectors Steel ETF (SLX), outperformed the broader market in the past year. SLX’s total return was -0.4%, compared to the Russell 1,000 Index’s total return of -5.6%. These figures and all statistics in the tables below are as of June 9, 2022.

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

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
United States Steel Corp. (X) 22.68 5.9 1.3
Algoma Steel Group Inc. (ASTL) 8.85 1.3 1.8
Stelco Holdings Inc. (STLC.TO) CA$39.92 CA$2.9 1.9

Source: YCharts

  • United States Steel Corp.: United States Steel is an American-based manufacturer and seller of steel products. It operates through three business segments: Flat-Rolled Products, U.S. Steel Europe, and Tubular Products. The company reported Q1 2022 earnings results on April 28. Record quarterly net earnings surged by nearly tenfold year-over-year (YOY) on solid revenue growth. All of the company’s primary business lines saw significant earnings net sales.
  • Algoma Steel Group Inc.: Algoma Steel Group is a Canada-based integrated producer of rolled steel products. It serves the automotive, energy, manufacturing, construction, and defense industries. On June 1, Michael Garcia became chief executive officer (CEO) of the company. Garcia succeeds Michael McQuade, who retired. Garcia has prior experience at numerous steel and financial companies.
  • Stelco Holdings Inc.: Stelco Holdings is a Canada-based steelmaker that produces and sells steel products. Some of its products include flat-rolled value-added steels, pig iron, and metallurgical coke.

These are the top steel stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest Growing Steel Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Cleveland-Cliffs Inc. (CLF) 20.64 10.8 2,040 47.1
Algoma Steel Group Inc. (ASTL) 8.85 1.3 N/A (see company description below) 156.1
United States Steel Corp. (X) 22.68 5.9 762.9 42.9

Source: YCharts

  • Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. The company also supplies stainless steel tubing and other products. On April 22 Cleveland-Cliffs reported earnings for Q1 2022. Net income attributable to shareholders rose more than 19-fold on significant revenue improvement YOY. Net income growth was negatively impacted by one-time cash charges of roughly $111 million.
  • Algoma Steel Group Inc.: See company description above. Note that Algoma Steel does not have an EPS growth figure in the table above because EPS went from negative to positive over the period in question.
  • United States Steel Corp.: See company description above.

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 (%)
TimkenSteel Corp. (TMST) 23.00 1.1 46.6
Commercial Metals Co. (CMC) 39.25 4.8 21.5
Steel Dynamics Inc. (STLD) 76.79 14.5 21.1
Russell 1,000 N/A N/A -5.6
VanEck Vectors Steel ETF (SLX) N/A N/A -0.4

Source: YCharts

  • TimkenSteel Corp.: TimkenSteel manufactures and sells steel and mechanical components including steel bars, bearings, seals, tubes, and chains. The company’s major customers are in the oil and gas, industrial, mining, construction, and power generation industries.
  • Commercial Metals Co.: Commercial Metals manufactures steel reinforcing bar (rebar). It also produces merchant bar, steel fence posts, and wire rod. The company serves customers in North America and Europe. In late April, Commercial Metals completed the acquisition of TAC Acquisition Corp., known as Tensar. Tensar provides ground stabilization and soil reinforcement products and services for construction and infrastructure projects. The seller was private equity firm Castle Harlan. The cash purchase price of the transaction was $550 million.
  • Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company sells flat-rolled steel sheet, structural beams, steel bars, and other products. Steel Dynamics announced on May 16 that it would acquire Mexico-based scrap metals recycling company ROCA ACERO S.A. de C.V. ROCA operates four scrap processing facilities across Central and Northern Mexico and has an annual processing capability of roughly 850,000 gross tons. The terms of the acquisition were not disclosed.

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