Buy This, Not That: Don’t Be Fooled by This Steel Stock’s 37% Surge

Shah Gilani|June 11, 2025

Steel is back in the headlines as U.S.-Mexico tariff negotiations heat up…

And while one beaten-down steel stock just rocketed 37% off its lows, it’s actually burning through cash at an alarming rate.

I’ve looked at both companies’ balance sheets, and the contrast is shocking: The recent 37% winner is hemorrhaging $388 million in operating cash flow while its overlooked rival generates over $1.6 billion.

The flashy performer carries crushing debt loads while the steady winner maintains a rock-solid balance sheet.

Don’t get fooled by the surface numbers – the charts and fundamentals tell the real story of which steel stock will survive America’s industrial revival.

Click on the thumbnail below to see which steel stock actually deserves your investment dollars.

Transcript

Hey, everybody. Shah Gilani here with your weekly BTNT as in Buy This, Not That. We’re going to talk about a couple of steel companies today.

Why?

Because steel, once again, is in the news. The U.S. and Mexico seem to be getting closer to some kind of deal that would lower the tariffs on steel coming from Mexico.

Some of the steel stocks that have popped are reacting today. Of course, it remains to be seen because we know with a lot of the Trump tariffs, the walking back of those tariffs, the extensions, the pauses, and all that stuff and the ongoing negotiations.

We’re not sure where things are going to go, but steel is in the news. I’m going to start with Cleveland-Cliffs (CLF).

Why Cleveland-Cliffs? Because it had a heck of a pop recently. Cleveland-Cliffs has been in an awful slide for good reason. It was in the news a couple of weeks ago as a steel company that, in light of tariffs, might do better. The stock wasn’t doing well until all of a sudden, wait a second.

Maybe heavy tariffs on imported steel would resurrect the likes of Cleveland-Cliffs. I want to pull up the chart on this to show you how ugly it actually is. Cleveland-Cliffs has had just a terrible run.

Here’s the chart of Cleveland Cliffs.

This is a two-year chart. If I go to a one-year chart, this is how ugly it looks.

Pretty ugly slide. The problem with Cleveland-Cliffs is it’s not a buy. Yes, it had a pop. I’m looking down here. This low – really, this is how ugly this was.

This low was on May 30, 2025. It’s just a recent low. When the market opens up, that low close had Cleveland-Cliffs closing at $5.83. Then the next open, the stock screams up, gaps up, and closes at $7.18.

That’s a 23% gain off the bottom.

That looks like a pretty cool gap, but look, this is bottom fishing, people. When we got to the high here, the stock had a tremendous run-up. It was up 37% off the lows. Again, those lows, $5.83.

Yes, that’s an impressive pop, but all things being equal, this stock is down from its intraday high back on April 4, 2024, which was about just a shade under $23. It was $22.97. It’s down at yesterday’s close 65%.

Sixty-five percent. We’ll call that in a year. That’s ugly. It was down 74% at the lows, which were just right back here the other day.

Cleveland-Cliffs is not a buy despite the fact that maybe it would do better if tariffs were imposed on steel exporters around the country, and we don’t get flooded with steel here. But looking at Cleveland-Cliffs on its own, I’ll give you a couple of ugly numbers.

This is not a well-run company. Cleveland-Cliffs revenue is $18.61 billion. Profit margin -6.35%. Operating margins, -10.33%.

Return on equity, -16.34%. Horrible. Balance sheet, $57 million in cash versus debt of $7.62 billion.

Operating cash flow, trailing 12 months, negative $388 million. So no.

Yes, it had a pop, but it’s not a buy. The other stock I’m going to compare it to is Steel Dynamics (STLD).

Yes, it’s in the steel manufacturing business. It does a lot of similar stuff to what Cleveland does, but it also has a recycling business, which I like. If you look at this stock, it’s kind of gone sideways. I think it’s definitely a buy here for a lot of reasons.

Cleveland-Cliffs, no. Steel Dynamics, yes. Why? No. 1, I like their business better.

Steel Dynamics has a $19.86 billion market cap.

Revenue is $17.22 billion compared to Cleveland-Cliffs, which has more revenue at $18.62 billion.

The profit margin for Steel Dynamics is 6.8% versus Cleveland-Cliffs’ negative 6.35%. Operating margin here, positive 6.3% versus Cleveland-Cliffs’ negative 10.33%. Return on equity here for Steel Dynamics, 13.2% versus negative 16% plus for Cleveland-Cliffs.

Cash here on the balance sheet, $1.21 billion versus Cleveland-Cliffs’ $57 million in cash. The debt here, $4.2 billion, versus Cleveland-Cliffs’ debt of $7.62 billion. Operating cash flow for Steel Dynamics, $1.64 billion trailing 12 months versus negative $388 million for Cleveland-Cliffs.

Yes, not a great-looking chart, but above the moving averages.

If you’re going to buy a steel company in the U.S., buy Steel Dynamics, don’t buy Cleveland-Cliffs. Yes, it had a pop, but where’s it going? Nowhere.

It’s Steel Dynamics over Cleveland-Cliffs any day.

Catch you guys next week. Cheers.