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3 Steel Stocks Soaring After Tariff Announcements

Steel stock market chartThe broader stock market sentiment has been shaky due to concerns that President Trump will implement potential trade tariffs, affecting some of the major industries in the United States economy and those of its trading partners. However, some of the market’s signals may indicate that these tariffs may be a positive development for domestic manufacturing stocks.

That is why three stocks in the steelmaking industry saw positive and leading price action over the past five days. They are looking to end the first month of 2025 on a strong note. As momentum builds up in these names, it may trigger the floodgates for continued momentum into the coming months. This theme is justified by the recent sentiment of Wall Street analysts and the activity of institutional accumulation.

Broader economic trends, which will become clear in just a minute, will help investors push their portfolios into double-digit upside potential through shares of Cleveland-Cliffs Inc. (NYSE: CLF) or United States Steel Co. (NYSE: X) and even an overseas steelmaker play in Brazil to deal with China’s demand coming back online through Ternium (NYSE: TX). Here is why today’s list of stocks should be additions to any portfolio.

Cleveland-Cliffs Stock: The Biggest Discount

The worst performer on this list in recent years under a strong dollar regime, Cleveland-Cliffs stock is now trading at just 44% of its 52-week high. This has made it the "low-hanging fruit" Wall Street analysts were eager to upgrade and boost.

With the President’s view in place, which calls for lower interest rates and a lower dollar to boost domestic manufacturing, on top of the tariffs being placed on trading partners, it looks like business activity will be headed to these domestic markets, as shown in recent price action.

Over the past month, Cleveland-Cliffs stock delivered a run of up to 8.6% to outperform the broader S&P 500 index by as much as 7% during the same period, which starts to signal to investors that the market is becoming more bullish on these steel stocks.

More than that, Wall Street analysts see a $16.9 price target for Cleveland-Cliffs stock today, calling for up to 69.2% upside from where the stock trades today, giving investors one of the best risk-to-reward ratios in the market today to get their 2025 aligned with market-beating performance.

United States Steel, No Deal Means Good Deal

Now that the takeover deal for United States Steel has been blocked by Japanese maker Nippon Steel Co. (OTCMKTS: NPSCY), the message investors can take away is that insiders are aware of how cheap this company is today, so they would instead reject the offer and wait until industry dynamics improve along with valuations.

This view might explain why the company’s short interest has consistently declined for the past three quarters, giving investors an implication for bearish capitulation, with a 3.1% decline in the past month alone. The underlying earnings growth backs this retreat and potential upside for the future of United States Steel stock.

Wall Street analysts now forecast up to $0.96 in earnings per share (EPS) for the same quarter 12 months from now, meaning a net growth rate of 71.5% from today’s level of $0.56. Since stock prices are typically driven by underlying EPS growth, this forecast might justify a potential double-digit upside in the stock for the coming months.

Ternium Stock’s Premium Is Justified

Even though Ternium stock trades at 66% of its 52-week high today, its valuations still call for premiums over peers and the rest of the industry. More specifically, the company’s price-to-earnings (P/E) ratio of 73.3x today calls for a steep premium above the industry’s 19.4x average multiple today.

The market is willing to pay this high premium because of the underlying growth they expect to see in this name. Because China’s manufacturing activity has been expanding for the past three months, and its trade activity has followed, demand for steel and iron ore will also likely spike.

In today’s trade routes, it is Brazil that meets China’s demand for these materials, which explains the consensus price target of $55 for Ternium stock today, implying a net upside of as much as 87.5% from where it trades today. More than that, management is so confident about the company's future that they’ve kept a $1.80 per share dividend payout.

On an annualized basis, this would translate into a dividend yield of up to 6.1% today, beating all inflation rates that might come in the United States, which comes on top of the massive upside potential in the price.

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