United States Steel Corporation (NYSE:X) — Since bottoming in late January just above $6, X stock has been on a tear, soaring more than 300%. Two recent analyst upgrades and a bullish chart should help propel shares even higher.
U.S. Steel was once one of the power corporations in this country, but it suffered as foreign producers began shipping steel products to our country at a fraction of our production costs. However, by transferring some production facilities to Europe and opening an integrated steel and coke production plant in Slovakia, U.S. Steel has been able to lower production costs. In addition, the United States negotiated tough new tariffs on some nations who were undercutting our steel prices.
Both S&P Capital IQ Equity Research and Argus raised their opinions of X stock from “Hold” to “Buy” last week. They have a price target of $30 to $31 on the shares, and both firms also drastically increased their full-year earnings estimates and now project the steelmaker will report a profit in its fiscal 2016 year.
These upgrades came following the company’s Q2 earnings announcement, in which U.S. Steel posted a smaller-than-expected loss due to cost cutting, price increases and improving European operations.
Argus also cites the strong momentum in X stock in recent months. And turning to the chart, we can see that a long-term recovery was affirmed by a golden cross in April, followed by a “W “consolidation that was terminated with a breakout in July. Last week, a bullish post-earnings breakaway gap launched from a double-top at $21 further confirmed analysts’ targets of $30 to $31.
The gap from $23.34 to $24.74 could be partially closed before X stock heads higher. Therefore, try to buy shares at $24 with a trading target of $30 for a potential return of 25%.
