President Trump’s tariff blitz has rattled Wall Street and sent markets into a frenzy.
But while some sectors brace for impact, U.S. steel might just come out swinging. With foreign imports now pricier, domestic steelmakers could be gaining a competitive edge.
Sure, there are concerns that steeper tariffs could cool the economy and curb demand. Still, UBS analyst Andrew Jones isn’t losing sleep over it — he’s watching the shifts closely and sees opportunity in the reshuffling.
“Despite US steel trade protections (Section 232 updates & CAD/MEX/China tariffs) driving a material shortage & higher price deck, steel equities are down… In 2026-28, we expect capacity additions (BR2, Sinton, NUE WV), higher US utilizations (currently ~74%) and redirected trade flows to pull prices back to our MT forecast ($800/st vs ~$750/765/st priced into STLD/NUE). However, we are confident that prices will hold in the 800’s, supported by a much higher cost curve (on scrap) and higher import parities (on tariffs), even in a bleak demand scenario. We expect macro/demand destruction to be less than feared and US shipments will benefit from lower imports,” Jones opined.
Jones goes on to put his recommendations where his mouth is, picking two leading US steel stocks that have been on the backfoot in recent times, but which he thinks are poised to push higher from here. Essentially, Jones is telling investors that now is the time to buy the dip in these steel stalwarts. According to the data from TipRanks, both are Buy-rated and show solid upside potential. Let’s dive in.
Nucor (NUE)
We’ll start with Nucor, a $28 billion player on the American steel scene. Nucor was founded in 1955 and calls Charlotte, North Carolina, home. This company is one of the largest of the U.S. steel makers and a significant player in the world steel market.
Nucor is the largest recycler of steel scrap in North America and produces a wide range of steel and steel products, including rebars, beams, plates, and sheets, all of which are vital in the construction industry, along with such steel standbys as hot- and cold-finish steel, steel decking, pilings, a variety of fasteners and gratings, joists, overhead doors and other metal building systems, steel pipes and tubes, and various gauges of steel wire.
All of that makes up Nucor’s bread and butter, but as noted, the company also plays a strong role in steel recycling; the company is known for its activities in the scrap recycling and steel brokerage businesses. Nucor turns scrap metal into valuable steel products, which are in high demand from industrial customers. The company is a major provider of steel products in the automotive and construction industries, and its specialty steel products are even found in data centers.
Nucor has built itself into a high-end manufacturer with a solid base of demand in an essential industry and has been able to generate strong cash flows even in a highly cyclical business. The company’s cash position shows this; at the end of 4Q24, the last period reported, Nucor had $4.14 billion in cash and cash equivalents available, with an undrawn revolving credit facility of $1.75 billion.
Looking at the headline numbers, the company’s quarterly revenue came to $7.08 billion, down 8.2% from the prior year but $350 million better than had been anticipated. At the bottom line, Nucor beat the forecast—its $1.22 quarterly EPS was 59 cents per share above the estimates. The company’s revenues for the full year 2024 came to $30.73 billion, a total that was down from the $34.7 billion reported for 2023.
We should note here that Nucor’s stock peaked in November 2024 and that the shares are down 27% from that high point.
For Andrew Jones, in his coverage of Nucor for UBS, the key point here is Nucor’s high likelihood of posting growth when the tariff situation settles down. He writes, “Since early December, the stock has de-rated. Steel prices have rallied since the 25% S232 steel tariffs were announced. We think steel prices will fall in 2H25 after near term panic buying subsides and we worry that the unpredictable US trade policy will impact demand. However, there is offsetting reshoring potential (e.g. from the 25% tariffs on downstream goods) and the level of import protection through the 25% tariffs (potentially more on specific countries) exceeded our December expectations. We remain confident in medium term HRC prices >$800/st due to cost support from a higher cost curve (scrap) & import parity YTD, even if demand falls further. Higher import parity has turned around the plate market and NUE’s Products business is likely to benefit from 25% tariffs on downstream goods. With NUE’s medium term growth (and near term earnings momentum) and recent derating, we upgrade to Buy.”
That Buy rating comes along with a $160 price target that implies a 31% upside for the coming year. (To watch Jones’ track record, click here)
Nucor’s nine recent analyst ratings include six Buys and three Holds, for a Moderate Buy consensus rating. The stock is priced at $121.95, and its $157.5 average price target points toward a 29% gain in the next 12 months. (See NUE stock forecast)
Steel Dynamics (STLD)
Next up is Steel Dynamics, an Indiana-based company whose specialty is the production of quality, lower-carbon-emission steel products, which are mainly produced from scrap iron—or recycled ferrous scrap, in industry jargon—through the use of EAF (electric arc furnace) technology.
Steel Dynamics’ business is divided into three main divisions. The first, steel, turns out a wide range of common industrial steel products, such as coated sheet steel, cold-finished steel, hot- and cold-rolled steel, steel rails, structural steel beams, specialty steel sections, and various specialty engineered bar-quality steels. The company’s second division is metals recycling, which oversees the processing of scrap metals—both ferrous and non-ferrous—derived from derelict automobiles, appliances, and machinery, along with manufacturing scraps. These recycled items are prepped for sale and sent along to end-users who make use of the scrapped materials in new processes. Finally, Steel Dynamics’ third division, steel fabrication, concerns the production of steel products such as steel joists and deck systems for sale in the consumer markets.
In its last quarterly report, 4Q24, Steel Dynamics reported mixed results. Revenues came in at $3.87 billion, down 8.5% year-over-year and $90 million less than the Street had been looking for—but earnings, reported as an EPS of $1.36, were 8 cents per share better than the forecast. These mixed results came even as Steel Dynamics registered its second-highest annual steel shipments, at 12.7 million tons. The company is ramping up production at its Sinton, Texas, Flat Roll Steel Division, and operations at the facility exceeded 80% in November and December of 2024.
Shares in Steel Dynamics, like those of Nucor, saw their most recent peak this past November and have since fallen nearly 20%.
We’ll check in again with UBS analyst Andrew Jones, who believes that momentum is on Steel Dynamics’ side. Explaining his position, he writes, “Since the election, tariff protection for US steel & aluminium has exceeded our expectations, resulting in a significant rally in HRC prices. At the same time, the stock has sold off and de-rated with the selloff in the broader market on the escalating trade war. We think any demand downside is likely to be partly offset by reshoring efforts and the import protection is more significant. While we expect a pull back in steel pricing later this year, we think our $800/st HRC (vs market pricing in ~$750/st) is sustainable even with falling demand given how much cost curve support and import parity have lifted YTD. We also like STLD’s organic growth (STLD say ~$1.2bn in EBITDA from Sinton & aluminum). This should result in generous cash returns. With earnings momentum from 2Q, upside risk to consensus if spot HRC holds and a more supportive valuation, we think this is a good entry point.”
Quantifying his stance, Jones rates STLD shares as a Buy and gives the stock a price target of $149, reflecting a 20% upside potential over a one-year horizon.
With 10 recent analyst reviews on record and a 8-to-2 split favoring Buy over Hold, STLD shares have a Strong Buy consensus rating. The stock’s current trading price is $123.97, and its average price target, at $151, matches the UBS view, implying a 22% one-year upside potential. (See STLD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.