Can U.S. Steel Stock Beat the Market in 2021?

X qualified for a spot on Schaeffer's top stock picks for Summer 2021

May 14, 2021 at 12:41 PM
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United States Steel Corporation (NYSE:X) has nearly tripled over the past 12 months since the stock's price reached a multi-year low of $6.58 back on July 9. Year-to-date, the shares are up 51.5%, but there could be more room for the steel giant to run.

United States Steel recently declared a dividend of $0.01 per share of US Steel common stock. The dividend is payable on Wednesday, June 9. The company currently offers a forward dividend of $0.04, which is equivalent to a dividend yield of 0.14%.

X has struggled to maintain strong fundamentals, but US Steel stock could be shaping for some short-term gains. US Steel stock has an extremely low forward price-earnings ratio of 5.95 and has increased quarterly revenues by 75% since the second quarter of 2020. On the bottom-line, United States Steel has maintained a steady growth trajectory since the start of the COVID-19 pandemic. The company has added $680 million in net income since the second quarter of 2020, taking its net profits to $91 million in the first quarter of 2021.

On a long-term basis US Steel’s revenue has declined by more than 30% since 2018 and its net income has fallen by $2.28 billion during the same time period. Additionally, X ended 2020 with $1.165 billion in net losses. Those are some dicey numbers, there's no getting around it. But when you look at X's pent-up pessimism that can be unwound, it seems worth taking a flier on the stock. 

For starters, a healthy 19% of X's total available float is sold short. And among analysts, only two rate the stock a "strong buy," the other six doling out "hold" or worse ratings. Factor in the equity's ascending 40-day moving average as support and legislative tailwinds from President Biden's infrastructure bill, and you have an intriguing contrarian summer pick.

X Stock Chart

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