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What Makes U.S. Steel (X) Stock a Solid Choice Right Now

Shares of United States Steel Corporation X have popped around 34% year to date. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

U.S. Steel currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.

Let’s delve deeper into the factors that make this steel maker an attractive choice for investors right now.

An Outperformer

U.S. Steel’s shares have surged 205.4% over a year against the 104.5% rise of its industry. It has also outperformed the S&P 500’s 32.6% rise over the same period.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Estimates Going Up

Over the past two months, the Zacks Consensus Estimate for U.S. Steel for 2021 has increased around 22.9%. The consensus estimate for third-quarter 2021 has also been revised 15.5% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Solid Growth Prospects

The Zacks Consensus Estimate for 2021 earnings of $13.57 for U.S. Steel suggests year-over-year growth of 390.6%. Moreover, earnings are expected to register a 488.4% growth in the third quarter.

Positive Earnings Surprise History

U.S. Steel has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 25.1%, on average.

Upbeat Prospects

U.S. Steel recently announced upbeat guidance for third-quarter 2021. It expects record third-quarter results driven by its Best for All business model, strong reliability and quality performance, persistent customer demand as well as sustained rise in steel selling prices. The company expects adjusted EBITDA to be around $2 billion, which suggests an increase from the second quarter’s figure of roughly $1.3 billion.

The company’s Flat-rolled segment is projected to deliver record EBITDA and EBITDA margin in the third quarter led by the increased flow-through of higher steel selling prices into its adjusted contracts, spot selling prices and continued strong customer demand. The segment’s assets continue to perform well, creating efficiencies across the segment and increasing the segment’s profitability.

In the Mini Mill segment, third-quarter EBITDA and EBITDA margin are predicted to beat last quarter’s records on the back of higher steel selling prices and ongoing operating efficiencies.

The company also expects the European segment to deliver record EBITDA and EBITDA margin driven by strong steel demand and higher steel prices. The Tubular segment is expected to benefit from higher prices as well as volumes, which will help negate the impact of inflated scrap input costs.

U.S. steel prices have staged a strong recovery and hit record levels after plunging to pandemic-led multi-year lows in August 2020. The rebound has been driven by rising demand (especially in automotive and construction), tight supply conditions and higher raw material costs. The benchmark hot-rolled coil (“HRC”) prices have shot up more than four-fold from the lows witnessed in August 2020. HRC prices are currently hovering near the $2,000 per short ton level. As such, higher domestic steel prices should act as a catalyst for U.S. Steel.

United States Steel Corporation Price and Consensus

United States Steel Corporation Price and Consensus
United States Steel Corporation Price and Consensus

United States Steel Corporation price-consensus-chart | United States Steel Corporation Quote

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, Nutrien Ltd. NTR and AdvanSix Inc. ASIX, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has a projected earnings growth rate of 534.4% for the current year. The company’s shares have surged around 129% in a year.

Nutrien has an expected earnings growth rate of 173.9% for the current year. The stock has also rallied around 68% over a year.

AdvanSix has a projected earnings growth rate of 160.4% for the current year. The company’s shares have shot up around 212% in a year.


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United States Steel Corporation (X) : Free Stock Analysis Report

Nucor Corporation (NUE) : Free Stock Analysis Report

AdvanSix Inc. (ASIX) : Free Stock Analysis Report

Nutrien Ltd. (NTR) : Free Stock Analysis Report

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