The U.S. steel industry could be entering a pivotal period as President-elect Donald Trump’s proposed trade policies aim to bolster domestic production and protect U.S. manufacturers. With potential tariffs and fiscal stimulus on the horizon, the sector appears primed for growth. Despite some lingering concerns about global oversupply and pricing pressures, the combination of cyclical factors, such as steady demand and lower interest rates, alongside structural changes like favorable trade policies, suggests promising opportunities for investors.
In this watchlist, we’re highlighting three steel companies that stand to benefit from these developments. These stocks offer exposure to different aspects of the steel industry, from large-scale production to infrastructure-driven growth. Here’s why they’ve caught our attention.
Nucor (NYSE: NUE): A Resilient Industry Leader
Nucor remains a heavyweight in the U.S. steel industry, and its diversified operations position it well for future growth. While the stock has faced challenges this year, falling over 11% year to date, the outlook suggests a turnaround. Analysts forecast 4% annual volume growth and 2% annual pricing growth, supported by robust demand from construction and manufacturing sectors. Nucor’s ability to navigate cyclical downturns while maintaining steady performance makes it a solid choice for long-term investors. Goldman Sachs’ price target for Nucor implies significant upside, bolstered by expectations of steady earnings growth and improved market dynamics.
Commercial Metals Company (NYSE: CMC): A Quiet Performer Ready to Shine
Commercial Metals Company has been a standout performer, with its stock rising more than 23% year to date. The company’s strong focus on construction and infrastructure materials aligns perfectly with potential fiscal stimulus under the new administration. Projections of 4% annual volume growth and 2% annual pricing growth, alongside a compound annual growth rate of 9% by 2026, highlight its growth trajectory. With tariffs likely to limit foreign competition, CMC’s domestic focus could help sustain its momentum. For investors seeking a more stable play in the steel sector, CMC offers both growth potential and resilience.
Cleveland-Cliffs (NYSE: CLF): A High-Risk, High-Reward Play
Cleveland-Cliffs offers a compelling, albeit higher-risk, investment opportunity. Its focus on value-enhancing projects and cost reductions could drive outsized returns, with a projected 47% compound annual growth rate over the next two years. However, the stock has faced headwinds, plummeting nearly 39% year to date. Still, with anticipated annual volume growth of 3% and pricing growth of 1%, along with potential tailwinds from increased infrastructure spending, CLF could see significant gains if trade policies and demand trends unfold as expected. Investors with a higher risk tolerance may find this stock’s upside potential too enticing to ignore.
As we enter a period of heightened trade policy shifts and fiscal initiatives, these three steel stocks represent a strategic way to gain exposure to an evolving industry landscape. While each comes with unique risks and opportunities, the sector’s favorable dynamics and growth prospects make them worth a closer look. Stay tuned for further developments as trade policy details emerge and the U.S. steel industry finds its footing in this new era.