For Immediate Release

Chicago, IL – October 2, 2020 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Commercial Metals Company CMC, L.B. Foster Company FSTR, Schnitzer Steel Industries, Inc. SCHN, POSCO PKX and ArcelorMittal MT.

Here are highlights from Thursday’s Analyst Blog:

5 Red-Hot Steel Stocks Set to Run Higher in Q4

The steel industry has staged a recovery after being out of favor for much of the first half, thanks to a revival in demand in key end-markets from the coronavirus-induced slowdown and a rebound in steel prices.

With China (the top consumer of steel) seeing an economic rebound and businesses gradually resume across the world following loosening of lockdowns and restrictions, things are looking up for the steel industry for the balance of the year. Recovery across major end-use industries such as construction and automotive represents a tailwind for the steel industry.

Moreover, steel prices have gained strength on an upswing in demand. However, the resurgence of coronavirus infections in Europe and rising cases in the United States may play a spoilsport.

Steel Demand Takes an Upturn on Economic Recovery

Demand for steel has picked up with the resumption of operations across major steel-consuming sectors, following the easing of restrictions globally. The automotive industry has gotten back into gear following pandemic-led shutdowns on the back of a strong recovery in customer demand. Notably, major U.S. automakers are ramping up production to boost lean vehicle inventories at dealerships in the wake of surging demand. The automotive rebound is driving demand for flat steel products globally.

Moreover, the resumption of many projects, which were stalled earlier due to labor shortages

ArcelorMittal stock (NYSE: MT) increased 10.5% in a day on September 28, 2020. This was after the announcement of Cleveland-Cliffs deciding to buy ArcelorMittal’s US operations in a $1.4 billion cash and stock deal, expected to close later this year. ArcelorMittal will receive over $500 million in cash upfront while the remaining portion will be almost a quarter share in Cleveland-Cliffs stock (NYSE: CLF). After completing a $2 billion asset sale to reduce debt, this deal will help MT to repurchase shares with the $500 million cash proceeds. Also, this includes only the sale of its US assets, while MT will continue to serve North American markets with operations in Canada and Mexico. Thus, expectations of lower debt burden, gradual recovery in the steel market, and the new share repurchase program led to 10.5% intra-day spike in MT’s stock. Despite this rise and the fact that the stock is up almost 2x in the last 6 months, we believe that ArcelorMittal’s investors could see a further growth of close to 15% in wealth. Our dashboard What Factors Drove -59% Change In ArcelorMittal Stock Between 2017 And Now? provides the key numbers behind our thinking.

Some of the stock price decline between 2017-2019 is justified by the 48% decline in P/S multiple. This is despite a cumulative rise of 2.8% in revenues between 2017 and 2018, which in turn led to a 3.5% rise in revenue per share (RPS) during this period as the number of shares outstanding saw a marginal decline. Despite this rise, the P/S multiple declined sharply as the stock price saw a drop since 2017. Global steel prices declined due to the US-China trade war, while the price of the primary raw material (iron ore) remained elevated, which led to the company reporting losses in 2019. Thus,