While U.S. equities in general remain range bound and moribund as investors contend with headwinds like uneven economic growth and a hawkish Federal Reserve, we’re seeing the reappearance of some of the “Trump-flation” trade amongst steelmakers. The Market Vectors Steel (ETF) (NYSEARCA:SLX) is up 1.5% on Friday to push above its 200-day moving average in what looks like an exit from a five-month downtrend.
Since peaking in February, the SLX fell more than 20% into the low set two weeks ago. But now, reports that President Trump is looking at imposing tariffs on imported steel is sending the industry group higher in a big way.
The combination of fundamental tailwinds, technical strength and a modicum of value after a nasty pullback makes the move attractive to new money. Here are three steel stocks looking to benefit:
Steel Stocks Boosted by Trump: AK Steel Holding Corporation (AKS)
Shares of AK Steel Holding Corporation (NYSE:AKS) attempted to break up and out of their two-month uptrend channel on Friday, threatening to cross back above the 200-day moving average that was last tested in April. AKS shares fell more than 50% from their early January high as the “Trump-flation” rally faded amid a walking back of nationalistic trade threats and a slowdown in auto production. But with Trump apparently frustrated with China’s inability to control North Korea, he is looking at imposing a 20% tariff.
The company will next report results on July 25 before the bell. Analysts are looking for earnings of 14 cents per share on revenues of $1.56 billion. When the company last reported results on April 25, it reported earnings of 19 cents per share, which was 5 cents better than expected. Revenue increased 1% from the prior year period.
Steel Stocks Boosted by Trump: Cliffs Natural Resources Inc (CLF)
Shares of iron ore supplier Cliffs Natural Resources Inc (NYSE:CLF) are emerging from its five-month downtrend and have pushed above its 50-day moving average. Watch for a test of the 200-day average — up 10% from here — ahead of a return to the early March trading range near $9, which would be worth a near 30% gain for CLF.
The company will next report results on July 27 before the bell. Analysts are looking for earnings of 28 cents per share of CLF on revenues of $704.7 million. When the company last reported results on April 27, earnings of 16 cents per share missed estimates by 4 cents on a 51% increase in revenue from last year. Edge Pro subscribers are up 3% in the stock since adding a position earlier in the week.
Steel Stocks Boosted by Trump: United States Steel Corporation (X)
United States Steel Corporation (NYSE:X) shares are rising up and out of a three-month consolidation range and are pushing further away from their 50-day moving average. Watch for a closure of the post-earnings gap from late April ahead of a push to the 200-day moving average near $28 — which would be worth a near 30% gain for X from here.
The company will next report results on July 25 after the close. Analysts are looking for earnings of 49 cents per share on revenues of $3.2 billion. Cowen analysts note that X is has underperformed peers like Nucor Corporation (NYSE:NUE) in recent months on increased exposure to rolled steel and raw materials; but could be poised for a near-term opportunity now.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
