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U.S. Steel (X) Inks Iron Ore Agreement With Algoma Steel

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United States Steel Corporation (X - Free Report) entered into a four-year agreement with Ontario, Canada-based Algoma Steel Inc., to sell considerable volumes of quality iron ore pellets. The purchase agreement will run from 2021 through 2024.

The deal provides a new long-term iron ore customer to U.S. Steel’s Minnesota mines along with incremental volumes. Notably, this marks the second significant iron ore purchase agreement finalized by U.S. Steel in 2020. Per the company, these contracts indicate its commitment to extract incremental value from its iron ore assets as part of its ‘best of both’ integrated and mini mill strategy.

As U.S. Steel looks forward to complete its electric arc furnace in Alabama, continue investments in endless casting and rolling at Mon Valley Works as well as upgrades to the hot strip mill at Gary Works, the company will be able to fundamentally reposition its footprint to become the sole ‘best of both’ steel producer for its stakeholders.

Shares of U.S. Steel have plunged 46.6% in the past year compared with the industry’s 38% decline.



U.S. Steel’s adjusted loss per share of 73 cents in the first quarter was narrower than the Zacks Consensus Estimate of a loss of 80 cents.

During first-quarter 2020, the company adjusted its footprint, strengthened its balance sheet and aggressively cut costs amid the impacts of the coronavirus pandemic as well as volatility in the oil and gas markets. These actions helped the company surpass its first-quarter view.  

Zacks Rank & Key Picks

U.S. Steel currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited (AEM - Free Report) , Newmont Corporation (NEM - Free Report) and Barrick Gold Corporation (GOLD - Free Report) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 75.3% for 2020. The company’s shares have surged 59.9% in the past year.

Newmont has an expected earnings growth rate of 85.6% for 2020. Its shares have returned 112.8% in the past year.   

Barrick has an expected earnings growth rate of 64.7% for 2020. The company’s shares have surged 122.9% in the past year.

5 Stocks Set to Double

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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