3 Steel Stocks to Gain Strength as Tariffs Reshape the Market

February 06, 2025 at 09:50 AM EST

steel Laborer arc welding — Photo

Investors have had to deal with a lot of uncertainty lately in the stock market as President Trump has rolled out the latest rounds of tariffs, targeting goods traded with China, Mexico, and Canada first. These policies have created a common view for investors that leans on inflation coming back and domestic business demand falling off a cliff. However, there is evidence to prove this won’t be the case.

As of February 2025, recent economic data has come out to prove that domestic business activity is set up to do nothing but go up from here. However, not all domestic industries are made equal, as the manufacturing sector will likely take the lead in bullish price action for the coming quarters. With this in mind, investors should consider today’s list of steelmakers for their portfolios.

Starting with shares of Nucor Co. (NYSE: NUE), a clear discount has attracted new institutional buyers to seek exposure in this stock moving forward, starting the wave into steelmakers. The same characteristics of low downside and double-digit upside can be seen in United States Steel Co. (NYSE: X) as well as in Steel Dynamics Inc. (NASDAQ: STLD) to keep portfolios exposed to all the upside in this new rotation.

Why Institutions Like Nucor Stock

The manufacturing PMI index for the months of December and January has shown promising data when it comes to demand for the primary metals industry, and that’s where stocks like Nucor come into play. Most think that tariffs will hurt domestic business, but here’s why that might not be the case.

As international large-cap stocks have to deal with increased costs, concessions, and better prices will be offered through smaller domestic names like today’s list. At $31.2 billion in market cap, Nucor is well below the industry's mega-cap names and favors the tailwinds building for domestic supply chains.

This is why those at the Bank of New York Mellon decided to boost their holdings in Nucor stock by as much as 6.6% as of February 2025. This new allocation brought the bank’s position to a high of $195.9 million today, giving investors another bullish factor to lean on when they start forming their buying thesis.

Wall Street analysts felt comfortable enough to keep a consensus price target of $163.1 per share on Nucor stock, calling for a 22.3% upside from today’s price. Considering the stock has traded down to 66% of its 52-week high, this bullish call is all the more rare since analysts typically avoid boosting stocks that have been beaten down recently.

Markets Know United States Steel’s Value

There has to be a reason why the government blocked a takeover deal from Japan’s Nippon Steel Co. (OTCMKTS: NISTF), keeping United States Steel an independent business. The reason is that the current price is too cheap to give away.

At 79% of its 52-week high, United States Steel has yet to reflect the true value of future earnings, which will soon be reflected in the company’s financials. Investors can reiterate that view by checking where Wall Street analysts are forecasting earnings per share (EPS) from today’s net loss of $0.18 a share.

For the second quarter of 2025, analysts expect United States Steel to deliver up to $0.96 in EPS, a significant swing from today’s net loss that should be reflected in the stock’s price for the coming months. Seeing this potential upside, it made sense for allocators at the Massachusetts Financial Services Co. to boost their holdings by 26.5% as of November 2024.

With this new addition, the group now holds $162.5 million worth of United States Steel stock, or 2% of the company's current ownership.

Price Action Favors Steel Dynamics Stock

After steel stocks outperformed during a week full of tariff announcements, investors can see shares of Steel Dynamics stock leading the pack in today’s list by reaching 83% of its 52-week high.

Being in bullish territory is only the beginning since Wall Street analysts will likely boost this name first, given how much momentum it has gained.

Over the past month alone, Steel Dynamics stock has outperformed the broader S&P 500 by as much as 8%.

This is not an easy task and will probably become the norm for the following months. With this momentum in mind, seeing the company’s short interest fall over the past quarter shouldn't be a surprise.

With a 1.3% decline in the past month alone, this fall in short interest is a clear sign of bearish capitulation in the face of all the bullish tailwinds building up for Steel Dynamics stock and others on today’s list.

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3 Steel Stocks to Gain Strength as Tariffs Reshape the Market

Why Institutions Like Nucor Stock

Markets Know United States Steel’s Value

Price Action Favors Steel Dynamics Stock

Where Should You Invest $1,000 Right Now?

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