5 best steel stocks to buy for Q3 2023

By:

Charlie Hancox

Charlie is a Financial Writer for Invezz. He covers commodities, cryptocurrencies, and breaking news. Prior to joining Invezz he helped grow Crux Investor into the fastest-growing... read more.

Updated: May 3, 2023

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This page contains the top five stocks to invest in right now. Our team of financial analysts have conducted extensive due diligence and determined that these are your best options for investing in steel shares. In addition, we explain what steel stocks are and whether or not they are a good investment. Read on to get started.

What are the top steel stocks to buy?

The table below contains the five best publicly listed steel companies in the world. There is a good blend of seasoned veterans of the industry along with up-and-coming growth propositions, and you can find out about the company’s latest share price information by clicking the relevant link in the table.

1. Steel Dynamics, Inc. (NASDAQ: STLD)

Founded in 1993 and headquartered in Fort Wayne, Indiana, this is an American steel producer and metal recycler. The company operates through three different divisions: Steel Operations, Metals Recycling Operations, and Steel Fabrication Operations. Nearly half of STLD’s products are used in the construction trade.

Held by numerous hedge funds, Steel Dynamics stock has performed well in recent times, surging in value and providing a greater than 1.50% dividend yield to sweeten the deal for shareholders. With well over $9 billion in annual revenue and 9,000 employees, the company appears primed for even more growth as the North American economy kicks into top gear post-COVID.

The company is on this list because of how well it has performed in recent years. If Steel Dynamics can continue to drive its revenue up, further share price accretion could well follow, along with dividend growth.

2. Olympic Steel, Inc. (NASDAQ: ZEUS)

In the Olympics of steel, Olympic Steel would be a top contender for the gold medal. Incorporated in 1954 and based in Bedford Heights, Ohio, ZEUS processes and distributes metal products in the United States and around the world. Like STLD, the company operates in three distinct segments: Carbon Flat Products; Specialty Metals Flat Products; and Tubular and Pipe Products. 

The company’s share price had been trailing downwards in recent years, but since the beginning of the pandemic, it has experienced an impressive resurgence, and it is currently one of the top-performing steel companies around.

While its dividend yield is significantly less than Steel Dynamics at around 0.3%, the company’s share price and revenue growth – up to around $1.6 billion per year – makes it a great option for bullish steel speculators.

3. Tata Steel Ltd. (NSE: EQTATASTEEL)

Founded in 1907 and headquartered in Mumbai, India, Tata Steel is one of the world’s largest and most diversified steel companies, operating in 26 countries and owning commercial offices in over 35 nations. The company manufactures and distributes steel products in India and around the globe.

In recent years, EQTATASTEEL has been just about the top-performing steel stock by share price, surging in value by hundreds of per cent and delivering a reasonable 1.9% dividend yield to shareholders.

These days, Tata Steel generates over $22 billion in revenue every single year, and with an annual crude steel capacity of 34 million tonnes per annum, it is the company’s sheer scale that has landed it a spot on this list. It also benefits from being based in a jurisdiction with a blossoming economy, which should aid future growth.

4. Cleveland-Cliffs Inc. (NYSE: CLF)

Despite being designated as a meme stock in 2021 as retail investors discovered that some hedge funds had large short positions held against it, CLF is actually one of the best steel stocks you can get your hands on.

Founded by Samuel Mather in 1847 in Cleveland, Ohio, the company was formerly known as Cliffs Natural Resources, and it specialises in the mining, beneficiation, and pelletising of iron ore. In addition, and relevant to this list, it has a large steelmaking division that includes stamping and tooling.

Right now, CLF is the largest flat-rolled steel producer in all of North America, generating over $5 billion in annual revenue. As a result, the company’s share price has performed extremely well in the last few years. It is certainly an option to consider for keen steel investors and is well-deserving of a spot on our list.

5. Stelco Holdings Inc. (TSE: STLC)

Stelco was founded back in 1910 and it is headquartered in Hamilton, Canada. The company produces and sells a wide variety of steel products in Canada, the United States, and around the world. Its products are sold to companies that deal with appliances, automobiles, energy, construction, piping, and tubing.

This is another company that was falling in value before the pandemic, but now it has experienced a major resurgence, performing admirably in recent years and delivering a 1.8% dividend to loyal shareholders.

With around 2,000 employees and quarterly revenue of over $600 million, it may not be the largest company on this list, but its balance sheet and recent performance are enough to make it stand out. Led by CEO Alan Kestenbaum, a seasoned steel veteran with a swathe of experience, the company could be heading for more growth in the coming years.

Where to buy the best steel shares

To purchase shares in steel companies, you need to sign up to an online stock broker. These are easy-to-use platforms that have revolutionised the way in which retail investors can buy stocks. Rather than having to order stock over the phone as you would back in the day, now you can control your entire portfolio from a single digital interface. Click one of the links below to sign up to one of our recommended options.

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What is a steel stock?

A steel stock represents a portion of ownership in a publicly listed steel company. Anyone can purchase steel stocks, from regular retail investors to established institutional banks.

Investing in a steel stock gives you exposure to the price performance of that particular steel company as well as the broader industrial and construction market that steel is a key part of. Steel is also a key part of the international automotive industry, and given its numerous uses, it is the world’s second-most popular commodity after crude oil.

Steel is also a classic example of a cyclical stock since its performance will correlate with broader economic conditions. Essentially, In a bear market, steel demand will fall because of reduced expenditure on construction and other key steel growth drivers by national governments and private enterprises. However, in an economic boom, things will ramp up.

Are steel shares a good investment?

Steel is often a good investment during the early phases of growth during an economic bull cycle. If you can make an early entry, as steel demand ramps up, you could be in for substantial rewards. However, if economic conditions head in the opposite direction, the steel market will likely follow.

Global steel demand currently stands at over 1,850Mt, and this figure will continue to grow, especially as developing economies ramp up their expenditure. As a result, the steel macro story is one of the most robust narratives in the entire commodity trade – the permanence of its usefulness and the economic strength of the steel ecosystem is without question.

As the impact of the COVID-19 pandemic continues to dwindle, many analysts expect steel to perform well in the coming years as economies around the world are stimulated with additional spending. If you can pick a winning stock, steel could be a strong investment moving forward.