Goldman Sachs Bullish on US Steel Stocks
Goldman Sachs has initiated coverage on two major U.S. steel companies with Buy ratings, pointing to sustained higher steel prices driven by Section 232 tariffs. These tariffs have increased import costs and tightened supply, creating favorable conditions for domestic producers.
The bank also expects strong demand growth from infrastructure projects, along with steady expansion in private non-residential construction.
Strategy Focus: Cash Flow and Margin Expansion
Goldman emphasizes a preference for lower beta companies that can accelerate free cash flow and deliver stronger margins throughout the cycle. This is expected to come from improved metal pricing dynamics and diversified product offerings.
Nucor Corp: Market Leader With Structural Advantages
Goldman Sachs assigned a Buy rating to Nucor Corp with a 12-month price target of $210. As the largest steel producer in the United States, Nucor accounts for roughly 25% of total domestic steel output.
The company is also the largest scrap recycler in the U.S., giving it a significant cost advantage through vertical integration. This allows Nucor to maintain stronger margins compared to competitors.
Goldman highlights three key drivers behind its bullish outlook:
- Strong demand from end markets
- Increasing domestic market share due to reduced imports
- Volume growth from its West Virginia mill
Additionally, the firm sees Nucor transitioning from a heavy investment phase into a period focused on harvesting free cash flow.
Nucor expects first-quarter 2026 earnings between $2.70 and $2.80 per share, with improvements anticipated across all operating segments.
Commercial Metals Company: Leveraged to Construction Growth
Goldman Sachs also initiated coverage on Commercial Metals Company with a Buy rating and a $74 price target. The company is the largest U.S. producer of steel reinforcing bar, making it a critical player in the construction sector.
Goldman views Commercial Metals as a direct beneficiary of growth in infrastructure and non-residential construction over the next 12 to 18 months.
Through acquisitions such as CP&P and Foley, the company is evolving into a broader construction solutions provider, expanding its product mix and revenue streams.
Goldman estimates that this segment could account for more than 25% of EBITDA by 2028, supporting stronger and more stable margins over time.
Growth Outlook and Financial Performance
Commercial Metals is expected to benefit from:
- Strong North American demand
- Exposure to high-growth U.S. regions
- Both organic and acquisition-driven margin expansion
- A disciplined focus on balance sheet strength and cash flow generation
In its latest results, the company reported adjusted earnings of $1.16 per share for the second quarter of fiscal 2026, slightly below expectations. However, revenue came in stronger than forecast at $2.13 billion.
