For investors who are strong enough to withstand steel market volatility, JPMorgan is recommending two stocks that are poised for significant upside. The investment bank upgraded U.S. Steel and Nucor to “buy,” arguing that the steel market will stabilize in 2025 as interest rates fall and November’s presidential election becomes a thing of the past. “We expect a period of volatility in the coming months, but for investors with a long-term perspective who can tolerate risk, NUE and X are likely to see gains over the next year,” analyst Bill Peterson told clients in a research note on Monday. Peterson raised his price target for U.S. Steel by $2 to $42, implying a 34% upside from Friday’s closing price. He raised his price target for Nucor by $4 to $174, implying a 25% upside. Peterson said the company’s shares are likely to fall in a knee-jerk reaction. “Thus, despite our conservative price forecast, the standalone valuation remains strong, presenting an attractive buying opportunity for fundamental investors,” the analyst said. Peterson also said U.S. Steel’s free cash flow is likely to hit an inflection point in 2025 as capital expenditure requirements ease and support the resumption of share buybacks. Nucor’s valuation is currently below its multi-year average, which also makes it an attractive buying opportunity, he said. The company also has the best product diversification among those tracked by JPMorgan, he said. “We see particular value in the latter, which helps insulate earnings from volatility through the economic cycle, with interest rate and election uncertainty weighing on steel demand through the end of the year and into 2025, Peterson said.”
JPMorgan is bullish on the steel industry, and likes two stocks in particular.
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