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What Makes ArcelorMittal (MT) Stock a Solid Choice Right Now
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Shares of ArcelorMittal (MT - Free Report) have popped around 30% over the past three months. It is benefiting from improved market conditions and higher steel prices. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
ArcelorMittal currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make this steel giant an attractive choice for investors right now.
An Outperformer
Shares of ArcelorMittal have rallied 241.1% over the past year against the 180.8% rise of its industry. It has also outperformed the S&P 500’s roughly 40.7% rise over the same period.
Estimates Northbound
Over the past two months, the Zacks Consensus Estimate for ArcelorMittal for 2021 has increased around 72.1%. The consensus estimate for second-quarter 2021 has also been revised 98.7% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Solid Growth Prospects
The Zacks Consensus Estimate for earnings for 2021 for ArcelorMittal is currently pegged at $8.14, reflecting an expected year-over-year growth of 1,157.1%. Moreover, earnings are expected to register a 1,100% growth in second-quarter 2021.
Valuation Looks Attractive
ArcelorMittal’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value steel stocks, ArcelorMittal is currently trading at trailing 12-month EV/EBITDA multiple of 5, cheaper compared with the industry average of 8.16.
Upbeat Prospects
ArcelorMittal is witnessing a strong rebound in demand, especially in automotive, following the easing of lockdown measures. It envisions global apparent steel consumption (“ASC”) to grow 4.5-5.5% in 2021. This suggests an improvement from a contraction of 1% in 2020. The global steel industry is now benefiting from a favorable supply-demand balance that is supporting rising utilization as demand recovers. ArcelorMittal sees ASC to grow year over year in 2021 in all of its core markets.
The company remains focused on maintaining a competitive cost advantage and strategically growing through high-return projects in high-growth markets. It also intends to leverage existing infrastructure to develop its iron-ore resources, consistently return cash to shareholders through a defined capital return policy as well as lead on sustainable development.
Moreover, the company is expanding its steel-making capacity and remains focused on shifting to high-added-value products. Its cost-reduction initiatives will also support profitability.
ArcelorMittal has revealed a new $1 billion fixed cost reduction program. The program includes actions to improve productivity and maintenance efficiency, and rationalize support functions. The company noted that the plan includes a 20% reduction in corporate office headcount. ArcelorMittal expects to achieve the majority of the savings in 2021. Roughly 40% of these savings are expected to be achieved through productivity.
The company should also benefit from higher steel prices. Its average steel selling prices went up around 25% year over year in the first quarter of 2021 and boosted bottom line. Strengthening end-market demand, tight supply and higher raw material costs are driving steel prices.
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Celanese Corporation (CE - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .
Nucor has a projected earnings growth rate of 229.3% for the current year. The company’s shares have rallied around 159% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Celanese has an expected earnings growth rate of around 68.3% for the current year. The company’s shares have shot up roughly 92% in the past year. It currently sports a Zacks Rank #1.
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 160% in the past year. It currently carries a Zacks Rank #2.
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The only question is “Will you get into the right stocks early when their growth potential is greatest?”
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What Makes ArcelorMittal (MT) Stock a Solid Choice Right Now
Shares of ArcelorMittal (MT - Free Report) have popped around 30% over the past three months. It is benefiting from improved market conditions and higher steel prices. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
ArcelorMittal currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make this steel giant an attractive choice for investors right now.
An Outperformer
Shares of ArcelorMittal have rallied 241.1% over the past year against the 180.8% rise of its industry. It has also outperformed the S&P 500’s roughly 40.7% rise over the same period.
Estimates Northbound
Over the past two months, the Zacks Consensus Estimate for ArcelorMittal for 2021 has increased around 72.1%. The consensus estimate for second-quarter 2021 has also been revised 98.7% upward over the same time frame.
The favorable estimate revisions instill investor confidence in the stock.
Solid Growth Prospects
The Zacks Consensus Estimate for earnings for 2021 for ArcelorMittal is currently pegged at $8.14, reflecting an expected year-over-year growth of 1,157.1%. Moreover, earnings are expected to register a 1,100% growth in second-quarter 2021.
Valuation Looks Attractive
ArcelorMittal’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value steel stocks, ArcelorMittal is currently trading at trailing 12-month EV/EBITDA multiple of 5, cheaper compared with the industry average of 8.16.
Upbeat Prospects
ArcelorMittal is witnessing a strong rebound in demand, especially in automotive, following the easing of lockdown measures. It envisions global apparent steel consumption (“ASC”) to grow 4.5-5.5% in 2021. This suggests an improvement from a contraction of 1% in 2020. The global steel industry is now benefiting from a favorable supply-demand balance that is supporting rising utilization as demand recovers. ArcelorMittal sees ASC to grow year over year in 2021 in all of its core markets.
The company remains focused on maintaining a competitive cost advantage and strategically growing through high-return projects in high-growth markets. It also intends to leverage existing infrastructure to develop its iron-ore resources, consistently return cash to shareholders through a defined capital return policy as well as lead on sustainable development.
Moreover, the company is expanding its steel-making capacity and remains focused on shifting to high-added-value products. Its cost-reduction initiatives will also support profitability.
ArcelorMittal has revealed a new $1 billion fixed cost reduction program. The program includes actions to improve productivity and maintenance efficiency, and rationalize support functions. The company noted that the plan includes a 20% reduction in corporate office headcount. ArcelorMittal expects to achieve the majority of the savings in 2021. Roughly 40% of these savings are expected to be achieved through productivity.
The company should also benefit from higher steel prices. Its average steel selling prices went up around 25% year over year in the first quarter of 2021 and boosted bottom line. Strengthening end-market demand, tight supply and higher raw material costs are driving steel prices.
ArcelorMittal Price and Consensus
ArcelorMittal price-consensus-chart | ArcelorMittal Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Celanese Corporation (CE - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .
Nucor has a projected earnings growth rate of 229.3% for the current year. The company’s shares have rallied around 159% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Celanese has an expected earnings growth rate of around 68.3% for the current year. The company’s shares have shot up roughly 92% in the past year. It currently sports a Zacks Rank #1.
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 160% in the past year. It currently carries a Zacks Rank #2.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>