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3 U.S. Steel Stocks to Buy On Trump Tariff

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There is not much clarity yet surrounding President Donald Trump's planned tariffs on steel and aluminum, and Monday morning only complicated the issue after Trump took to Twitter to call out Canada and Mexico regarding NAFTA.

Last week, the president announced his intentions to impose new broad-based tariffs on steel and aluminum. The plan has been met with mixed reactions since then, especially in North America where the potential implications of these tariffs could have serious, long-term impacts.

Canada, as one of the top exporters of steel and aluminum to the U.S., could be harmed by this proposal, and Canadian Prime Minister Justin Trudeau said as much recently when he called Trump's tariff proposal " absolutely unacceptable ."

But Trump now seems set to use this steel and aluminum tariff as a tactic to help renegotiate the North American Free Trade Agreement, or NAFTA.

"We have large trade deficits with Mexico and Canada," Trump wrote in a tweet Monday morning. "NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed."

Even though the potential new tariffs aren't set in stone, it seems that the Trump administration is ready to roll out its plan this week, which should theoretically help U.S. steel makers-at least for now.

With that said, let's take a look at three U.S. steel stocks that investors might want to consider amid all this tariff talk.

1. Steel Dynamics, Inc. STLD

This Indiana-headquartered firm is one of the biggest domestic steel producers and metals recyclers, and stands to benefit from the planned steel tariff. Steel Dynamics is also currently a Zacks Rank #1 (Strong Buy) and is projected to see its earnings pop by nearly 22% in the first quarter of 2018, based on our current Zacks Consensus Estimate. This bottom-line growth is expected to continue, as Steel Dynamics' earnings are projected to reach $4.00 per share in fiscal 2018, which would mark 51% year-over-year growth.

Looking even further ahead, Steel Dynamics is projected to expand its earnings figure at an annualized rate of 12% over the next three to five years. The company has also seen analyst sentiment climb recently with a handful of upward earnings estimate revisions for its current quarter and full fiscal year.

2. United States Steel Corporation X

United States Steel is expected to see its current-quarter sales climb by 14%, while the company's full fiscal year earnings are projected to skyrocket by nearly 94%. Estimates regarding U.S. Steel's substantial bottom-line growth could be moved even higher once Trump's steel tariffs are enacted. In fact, the company's full year earnings estimates were already upped by $0.03 to $3.76 per share within the last seven days.

United States Steel is currently a Zacks Rank #1 (Strong Buy) and sports an overall "A" VGM score. Furthermore, the steel power is expected to see its earnings per share figure expand at an annualized rate of 8% over the next three to five years.

3. Nucor Corporation NUE

This North Carolina-based company is one of the largest U.S. steel manufacturing firms, having produced over 26 million tons of steel in 2017. Nucor is also currently a Zacks Rank #2 (Buy) and has seen its stock price pop nearly 16% in the last 12 weeks, with most of the gains coming before last week's tariff announcement.

Nucor is projected see its fiscal 2018 earnings reach $4.92 per share, which would represent 40% growth over 2017. The company is also expected to see its sales climb by more 13% over the next two quarters. Furthermore, the company's EPS figure is projected to surge at an annualized rate of 12% over the next three to five years. And this figure could climb even higher if the proposed 25% steel tariff creates its desired effect.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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