Steelmaker Cleveland-Cliffs (NYSE:CLF) is in focus today as investors pay close attention to commodity markets. With steel prices rising, CLF stock is up 12%.
Of course, the driving factor behind much of this commodity price volatility has been the Russian invasion of Ukraine. A number of important commodities are seeing futures prices surge as investors digest the impact this war will have on global trade.
One commodity that is of particular interest today is steel.
Steel producers such as Cleveland-Cliffs have benefited from surging steel prices. Reportedly, since the war began, steel prices have jumped nearly 60%. This substantial move higher obviously benefits the bottom line of domestic producers.
However, there is another catalyst taking investors in Cleveland-Cliffs on a nice ride today. Let’s dive into what the market is digesting right now.
CLF Stock Surges on Analyst Note
A recent analyst report from JPMorgan Chase highlighted Cleveland-Cliffs as a key beneficiary of this current environment. In addition to supply issues, analyst Michael Glick pointed to surging domestic demand in North America as a key reason to focus on U.S. steel producers.
Notably, Cleveland-Cliffs is the steel maker Glick points to as perhaps the biggest potential winner out of this current situation. This is because Cleveland-Cliffs has unique attributes that makes this company even more attractive.
Among the biggest benefits to CLF stock is the company’s business model. Cleveland-Cliffs operates in a number of key business segments within the steel industry. The various raw materials owned by the company, in addition to its iron ore assets, scrap business, iron plant, and pellets with excess capacity, are all positives for the company and its stock. Accordingly, given the current geopolitical situation, it’s Glick’s belief that these assets have become more valuable, both strategically and financially.
If we are indeed headed into a rather dire time, CLF stock is one great defensive option available to investors right now. Globalization may not be dead. However, investors have more reason to invest closer to home in this environment. In terms of Cleveland-Cliffs, Glick has set a price target of $44.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
