3 Steel Stocks That Are Winners, From a Wall Street Veteran

Coils of finished steel lie on flatbed railway cars at the Thyssenkrupp steel mill on April 8, 2025 in Duisburg, Germany. (Sean Gallup/Getty Images)

Steel markets have been dominated by President Donald Trump and tariffs this year. Investors just aren’t sure how presidential policy will whipsaw their sector. Wells Fargo analyst Timna Tanners launched coverage of several U.S. steel stocks on Wednesday, asking the question “what if tariffs stick?”

That would be good for domestic steel makers’ pricing and profitability. She sees three winners: Steel Dynamics , Commercial Metals , and steel coater AZZ .

“The first half of 2025 has been dominated by tariff discussion, their influence on pricing and demand, and how long they’ll last,” wrote Tanners in her Wells Fargo report, where she arrived recently from Wolfe Research. Tanners has also covered metals stocks for UBS and BofA Securities in her roughly two decades of studying the sector. “Arguably, prices are not high enough to invite much [new production capacity of] steel, a dynamic that can push prices higher once supply and demand are more balanced,” she added.

More capacity in 2025 and 2026 is keeping a relative lid on steel pricing. Tanners sees demand picking up in 2027 with lower interest rates boosting nonresidential construction, which drives some 40% of total steel demand.

As for tariffs, the White House might eventually back off its 50% import tariff on steel and aluminum. “However, there’s no evidence of any proclivity by the White House to revisit Section 232 [national security-related] tariffs.” Without lower tariffs, hot-rolled coil, a benchmark steel product, could settle around $900 a ton.

Figuring out what hot-rolled coil should trade for isn’t easy. Prices averaged about $650 per ton in the years before the pandemic, and in the past few years, they have ranged from below $500 a ton to more than $1,900. Hot-roll prices are currently about $830 a ton, up from $700 before Trump’s tariffs.

A $900-per-ton level is healthy for the domestic industry, and Tanners prefers stocks with more U.S. exposures. Her top picks are Steel Dynamics and Commercial Metals, with price targets for those Buy-rated stocks at $143 and $61, respectively. She also rates shares of steel and aluminum coater AZZ at Buy with a price target of $128.

Bullish calls didn’t help. Most steel stocks fell on Thursday. Shares of AZZ were up early but fell 3.2%, closing at $112.88. Steel Dynamics dropped 1.4% to $127.48. And Commercial Metals fell 2.1% to $57.13. The S&P 500 and Dow Jones Industrial Average finished closed to flat.

Tanners rates shares of both Nucor and Cleveland-Cliffs at Hold with respective price targets of $145 and $10. Those shares fell 1% and 0.7%, respectively.

Tanners rates Ternium shares at Sell with a price target of $30. She prefers companies with more U.S. exposure, and Ternium has a large presence in South America. The stock fell 2.6% to $32.24.

Overall, 46% of analysts covering Ternium stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

The Buy rating ratios for Steel Dynamics, Commercial Metals, and AZZ are 73%, 29%, and 64%, respectively. The Buy-rating ratios for Nucor and Cleveland-Cliffs are 76% and 25%, respectively.

Write to Al Root at allen.root@dowjones.com