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5 Reasons That Make Cleveland-Cliffs (CLF) a Solid Choice Now

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Cleveland-Cliffs Inc. (CLF - Free Report) stock looks promising at the moment. The company has seen its shares pop roughly 16% year to date. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s take a look into the factors that make this mining company a compelling choice for investors right now.

What’s Working in Favor of CLF?

An Outperformer: Cleveland-Cliffs, a Zacks Rank #1 (Strong Buy) stock, has trounced the industry over the past six months. The company’s shares have rallied around 39.2% over this period, compared with roughly 18.7% gain recorded by the industry.


Forecast-Topping Q1 & Upbeat Outlook: Cleveland-Cliffs’ adjusted loss for first-quarter 2018 of 8 cents per share was narrower than the Zacks Consensus Estimate of a loss of 21 cents.

Cleveland-Cliffs posted first-quarter consolidated revenues of $239 million, which topped the Zacks Consensus Estimate of $197.1 million.

Realized revenues per long ton in the company’s U.S. iron ore business improved 32% year over year to $105 in the quarter, mainly driven by a favorable pricing adjustment resulting from considerable increase in domestic hot-rolled coil steel pricing. The company expects its full-year revenue realization to be roughly $102 to $107 per long ton.

Cleveland-Cliffs, during the quarter, witnessed healthy steel demand in several sectors including construction, machinery and equipment, automotive and energy. It also believes that consumption will be very high this year as business environment remains good. The company also expects prices to continue remaining high. Cleveland-Cliffs expects strength in the U.S. steel market coupled with its enhanced pellet supply contracts to help it deliver significantly higher EBITDA and cash flow in 2018.

Cleveland-Cliffs also raised its sales volume expectations for 2018 for its U.S. iron ore business factoring in strong demand. The company now sees sales volume to be 20.5 million long tons for the full year, up from roughly 20 million long tons expected earlier.

Positive Earnings Surprise History: Cleveland-Cliffs has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 49.9%.

Estimates Moving Up: Annual estimates for Cleveland-Cliffs have moved north over the past month, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 34% to $1.41 per share. The Zacks Consensus Estimate for 2019 has also moved up 29% over the same timeframe to $1.29.

Solid Growth Prospects: The Zacks Consensus Estimate for earnings for second-quarter 2018 for Cleveland-Cliffs is currently pegged at 50 cents, reflecting an expected year-over-year growth of 92.3%. Moreover, earnings are expected to register a whopping 182% growth in 2018.

Cleveland-Cliffs Inc. Price and Consensus


Cleveland-Cliffs Inc. Price and Consensus | Cleveland-Cliffs Inc. Quote

Other Stocks to Consider

Other top-ranked stocks in the basic materials space include Celanese Corporation (CE - Free Report) , Huntsman Corporation (HUN - Free Report) and Methanex Corporation (MEOH - Free Report) .

Celanese has an expected long-term earnings growth rate of 8.9% and flaunts a Zacks Rank #1. Its shares have gained roughly 24% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman has an expected long-term earnings growth rate of 8.3% and flaunts a Zacks Rank #1. The company’s shares have moved up around 20% in a year.

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 59% over a year.

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