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Credit Suisse likes U.S. Steel, Cliffs to buck falling commodity prices

Feb. 18, 2015 2:58 PM ETUnited States Steel Corporation (X) StockX, CLFBy: Carl Surran, SA News Editor6 Comments
  • U.S. Steel (X -2.1%) is the most compelling story in the steel and iron ore sector, and remains a top pick on a one- to three-year view, Credit Suisse says, noting that historical conceptions about the profitability of the business become irrelevant when management is operating these assets under a fundamentally different operating strategy - for profits rather than for volumes.
  • Also, in the absence of valuation and earnings support, Cliffs Natural Resources (CLF +0.8%) has become a long-dated commodity-price option, Credit Suisse says, and as such, it should trade at a higher multiple than the average coal company; applying, say, a 20x multiple to CLF's ~$300M 2015 EBITDA "implies an equity value of over $20/share (or at least something significantly higher than today’s share price)."

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