Steel stocks are among the class of investments that become more popular when fears of inflation increase. And these stocks are perhaps even more popular right now, as shortages have put upward pressure on the price of steel. As steel remains an important material in buildings, bridges and cars, demand remains strong despite persistent shortages.

This translates into a potential opportunity for investors. While steel is considered a commodity, it requires intense processes to produce, so there are a small number of companies that set themselves apart among steel stocks. We’ll take a look at some of the best steel stocks to buy if you want to take advantage of what could be a mini-boom for steel investment.

Steel stocks to buy now.

Steel Stocks to Buy

Here are the steel stocks to buy right now:

  • Nucor Corp. (NYSE: NUE)
  • Steel Dynamics Inc. (Nasdaq: STLD)
  • Cleveland-Cliffs Inc. (NYSE: CLF)
  • United States Steel Corp. (NYSE: X)
  • Ryerson Holding Corp. (NYSE: RYI)

No. 5 Nucor Corp.

Although Nucor’s name refers to its mid-20th century attempt to enter the nuclear power industry, its business model today centers around the production of steel and related products. Nucor is based in Charlotte, North Carolina and its roots date back to 1904. Today, the company produces many steel and related products, including merchant bar, beam, sheet, plate in addition to cold finish, joists, decking and plenty more.

Nucor stock has fared extremely well lately with a 1-year return of 92%. It has a market cap of nearly $37 billion and the stock pays a dividend of about 1.5%. The stock is undervalued, and for the past two quarters, Nucor has posted revenue of about $10 billion and a net profit of about 21%. Despite all this, analysts recommend holding the stock right now, perhaps due to stabilizing steel prices.

No. 4 Steel Dynamics Inc.

Steel Dynamics was founded in 1993 by three former Nucor executives who had $370 million in financing to kick-start their new business venture. They set out to become a low-cost leader by advancing mini-mill technology. Today, it produces steel products that include hot roll, cold roll and coat sheet steel. The company has about 13 million tons of steel shipping capacity.

Valued at just under $14 billion, this steel stock has less than half the market cap of Nucor. It also has a slightly lower EPS, though its P/E ratio is also lower. Depending on your strategy, though, it may also be a plus that STLD sells for about half of NUE’s price. STLD’s 1-year return is about 50%. Its revenue in Q4 2021 was about $5 billion, and it has a profit margin of around 21%. Also, analysts recommend buying the stock with potentially double-digit returns over the next year.

No. 3 Cleveland-Cliffs Inc.

Cleveland-Cliffs is based in Cleveland, Ohio, and is the largest flat-rolled steel producer in North America. It specializes in the mining, beneficiation, and pelletizing of iron ore in addition to steel production. The company also acquired ArcelorMittal USA and AK Steel in order to become more vertically integrated from the process of mining to the manufacturing of steel products.

Cleveland-Cliffs is very comparable in size to Steel Dynamics with a market cap of just under $14 billion. It doesn’t pay a dividend, but the stock is undervalued and has a low share price. This steel stock’s most recent quarterly revenues were about $5 billion with a 16.7% net margin. Sentiment around the stock is strong, and analysts recommend buying the stock as it should continue to rise.

No. 2 United States Steel Corp.

United States Steel Corp., also known as U.S. Steel, is another steel company with roots going back to the early 20th century.  It recently acquired Big River Steel in order to expand its mini-mill capability in addition to its integrated technology. The company’s products include sheet steel, steel plate, and tubular steel. In 2018, it was the second-largest steel producer in the U.S., trailing only Nucor.

U.S. Steel is valued at about $8 billion, and like most steel stocks, is currently undervalued. It pays a small dividend of around 0.6%. Its shares sell for around $30 per share and are up about 40% over the past year. In Q3 2021, the company had a profit of over 33% to go with just under $6 billion in revenue. Q4 was not quite as good, but it still maintained a profit of 19%. However, the prevailing sentiment right now is to hold, with a possible correction ahead.

Steel Stocks No. 1 Ryerson Holding Corp.

Ryerson is a little different from the other companies on this list in that it is an online metals supplier. However, it is also the oldest company on this list of best steel stocks to buy. It was founded in 1842 and is currently based in Chicago, Illinois. Its products include many varieties of steel, stainless steel, aluminum, alloy and more. It also offers value-added processing such as splitting, sawing, and blanking.

Ryerson is also a smaller company with a market cap of about $1.25 billion. However, for a company of its size, it posted an impressive $1.53 billion in revenue for Q4 2021 with a gross margin of 21%. Its shares sell for around $30 and are up nearly 85% over the past year. It also pays a 1.26% dividend. There are not many analyst opinions on this company given its size, but one recommended holding it. However, its 1-year return certainly makes it appear tempting.