United States Steel Corporation (X): What Makes It the Best Industrial Stock to Buy Now?
We recently compiled a list of the 10 Best Industrial Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where United States Steel Corporation (NYSE:X) stands against the other industrial stocks.
Industrial stocks in the United States encompass a broad range of sectors including manufacturing, transportation, aerospace, defense, and construction. These sectors form the backbone of the American economy, driving innovation, employment, and growth. Companies within this category often engage in the production of machinery, equipment, and infrastructure essential for various industries. The performance of industrial stocks is closely tied to the overall health of the economy. Economic expansion typically boosts demand for industrial goods and services, while recessions can lead to contractions in this sector.
Recently, industrial stocks have shown resilience amid global supply chain disruptions and economic uncertainty, thanks in part to technological advancements and diversified service offerings. Advancements in automation, robotics, and artificial intelligence are transforming the industrial landscape. Companies are increasingly investing in smart manufacturing technologies to enhance productivity and reduce operational costs. Environmental concerns and regulatory pressures are pushing industrial firms toward sustainable practices. Companies are adopting greener technologies and renewable energy sources to meet regulatory standards and consumer expectations. Industrial stocks play a vital role in the US economy, offering a diverse range of investment opportunities. Understanding the dynamics of different sectors, keeping abreast of market trends, and evaluating economic indicators are crucial for making informed investment decisions in this space. With continued advancements in technology and a focus on sustainable practices, the industrial sector remains a critical and evolving component of the financial market landscape. Overall, industrial stocks returned close to 10% so far in 2024.
According to Federal Reserve Industrial Production and Capacity Utilization report, most major market groups saw gains in May. Consumer goods increased by 1.3 percent, driven by rises across all components except home electronics. Business equipment edged up by 0.2 percent despite a drop in transit, buoyed by gains in information processing and industrial sectors. Defense and space equipment rose by 1.0 percent, marking a nearly 10 percent increase from a year ago. The materials market group saw a 0.8 percent increase, with non-energy durables and non-energy nondurables each up by around 1 percent, and energy materials rising by 0.6 percent. In manufacturing, overall output rose by 0.9 percent in May, slightly above last year's level. Durable manufacturing increased by 0.6 percent, nondurables by 1.1 percent, and other manufacturing (publishing and logging) by 0.2 percent. Within durable manufacturing, notable gains were seen in wood products (up 2.6 percent), machinery (up 2.3 percent), and computer/electronic products (up 0.8 percent). Furniture and related products saw the largest decline (down 2.6 percent). In nondurables, printing and support activities decreased by 1.5 percent, while other categories saw gains. Mining output rebounded with a 0.3 percent increase in May, following declines in the previous two months. Oil and gas extraction rose, offsetting decreases in other mining and support activities. Utilities output grew by 1.6 percent, surpassing last year's level by 3.9 percent. Capacity utilization for manufacturing rose to 77.1 percent in May, slightly below its long-run average. Mining's operating rate reached 92.7 percent, well above its average, while utilities remained notably below their typical operating levels despite a slight increase to 71.5 percent.
So, what are the best industrial stocks to buy in this current environment?
Our Methodology
We leveraged Insider Monkey's comprehensive database of 920 prominent hedge funds to identify the top 10 industrial stocks with the highest level of hedge fund investment as of Q1 2024. These stocks are listed in order of increasing hedge fund ownership, providing insight into the most popular industrial stocks among elite investors.
A conveyor belt winding its way through a steel production facility.
United States Steel Corporation (NYSE:X)
Number of Hedge Funds Holders: 70
United States Steel Corporation (NYSE:X) manufactures and markets flat-rolled and tubular steel products, focusing primarily on markets in North America and Europe. Its operations are divided into segments: North American Flat-Rolled (Flat-Rolled), Mini Mill, U. S. Steel Europe (USSE), and Tubular Products (Tubular). On June 17, United States Steel Corporation (NYSE:X) revised its Q2 2024 guidance, expecting adjusted earnings per share of $0.76 to $0.80 and adjusted EBITDA of around $425 million, slightly lower than previous forecasts. CEO David B. Burritt cited stable domestic flat-rolled steel demand and variable spot steel prices for the adjusted EBITDA revision. The company highlighted restarting a blast furnace in Europe to meet increased customer demand and announced progress on new facilities aimed at meeting rising demand for sustainable steel. In another development, regulatory approvals for its transaction with Nippon Steel Corporation are nearly complete, expected to bring advanced technologies to enhance U.S. steel capabilities. On May 20, Jefferies began covering United States Steel Corporation (NYSE:X) stock, issuing a Buy rating along with a price target of $45.00. According to the firm's analysis, United States Steel Corporation (NYSE:X) valuation is distinctively favorable compared to its peers, particularly highlighting that the company's stock price is considerably lower than the accepted offer from Nippon. Jefferies believes this presents substantial upside potential for the stock.
During Q1, 2024 the count of hedge funds holding positions in United States Steel Corporation (NYSE:X) rose to 70 from 63 in the prior quarter, as reported by Insider Monkey's database encompassing 920 hedge funds. These holdings collectively amount to around $2.38 billion. Matthew Halbower's Pentwater Capital Management emerged as the leading shareholder among these hedge funds during this timeframe.
Overall X ranks 6th on our list of the best industrial stocks stocks to buy. You can visit 10 Best Industrial Stocks to Buy According to Hedge Funds to see the other industrial stocks that are on hedge funds’ radar. While we acknowledge the potential of X as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than X but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.