These U.S. Steel Companies Are Forging a Comeback


Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries.

—President Donald Trump

MIDDLETOWN, OHIO—Right now, I’m traveling through the Rust Belt to see how President Trump’s “America First” platform is working for people.

I want to know if his policies are helping the economy… or crippling it.

So far, what I’ve seen suggests the economy is strengthening.

Jobs are coming back and people aren’t worried about losing the ones they have. This is a very different picture than the one painted by the mainstream media. They like to promote doom and gloom. Those kinds of stories are better for ratings.

At the Daily, we don’t care about ratings. We care about making you richer every day. So we’re going to report what’s actually going on… and how it affects your investments.

My latest stop was in Middletown, Ohio. It’s home to one of the biggest steel mills in the country. And it’s poised to benefit from one of President Trump’s favorite weapons: tariffs.

On April 21, Trump made the statement above during a meeting with steel company executives at the White House. The president pledged to crack down on the Chinese practice of dumping its cheap surplus steel into the United States.

The U.S. steel industry was already on the rebound before Trump took office. But I think it will go much higher if the president gets his way. In a moment, I’ll show you a few companies that will benefit from this policy.

Steel’s Meltdown

Middletown looks like its best days were back in the 1970s… when U.S. steel was king.

I bounced along the main drag (Roosevelt Blvd.) wondering when it was last paved. Weeds grew in sidewalk cracks, and the buildings looked tired. It’s a city in need of some TLC.

The fine dining establishments here consist of the Lone Star Steakhouse, Olive Garden, and Applebee’s.

But most steel towns are a little run-down. The industry has been in decline for years.

According to fact-checking website PolitiFact, there were five times more steel workers in the 1980s than there are today.

But Middletown is better off than some other steel towns.

For example, the population of Gary, Indiana, has been halved since the 1980s. All because the U.S. stopped making as much steel.

You see, making steel is very labor-intensive. It’s cheaper to bring in steel from low-cost countries like China than to produce it here. And that’s been devastating for these kinds of towns.

I came to Middletown to visit AK Steel’s mammoth plant.

The company employs about 3,000 people in a town of 48,000. The steel plant sits on 2,791 acres. That’s 4.4 square miles of steel-producing capacity.


If the AK Steel plant ever closed, Middletown would be devastated.

A Rebounding Industry

Today, U.S. steel plants are under attack by government-subsidized steel from China.

China is making way more steel than it needs. And for years, China has been dumping its cheap steel on the U.S. market.

U.S. steel production declined 20% in the past 10 years alone. But it started to rebound in 2016.

That’s because the U.S. got serious about putting a stop to this. That’s when we put a 450% tariff on corrosion-resistant steel imported from China, along with smaller tariffs on that same type of steel imported from Italy, India, South Korea, and Taiwan.

After that happened, stocks of companies like AK Steel went on an epic run.

AK Steel (AKS) went from $2 at the beginning of 2016 to over $11 by the start of 2017. Nucor (NUE) doubled. Steel Dynamics (STLD) nearly tripled.

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Right now, all these companies have pulled back a little from their highs.

But they are poised to go higher as long as the U.S. protects this industry. The U.S. needs steel, and it looks like more of it will come from U.S. steel companies.

Look for these steel companies to thrive in an “America First” environment.

It looks like more tariffs are coming to the industry. And when that happens, we could see a repeat performance of 2016 for these companies.

Regards,

Nick Rokke, CFA
Analyst, The Palm Beach Daily

MARKET BRIEFS

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Gold Regaining Its Luster: Here’s a sign that gold may be poised for a rebound… Bloomberg reports that the number of gold vaults around the world has surged. Two firms (CoinInvest and Baird & Co.) plan to open vaults in Europe capable of holding more than $112 million in gold. And one company seeking to capitalize on this boom is INTL FCStone. It has started a platform to allow investors with gold in vaults to trade with one another. Since starting in February, INTL has linked 1,500 locations with more than 100 customers active in the $170 billion professional gold market. You can read more here.

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MAILBAG

From Tom P.: Are we ever going to get anything but cryptocurrency recommendations from PBRG? I’m a lifetime Infinity subscriber, and not everyone wants to invest in cryptocurrencies. I don’t mind some crypto stuff but geez man, come on.

Because I can’t use money out of my IRA account to buy cryptocurrencies, I haven’t made a trade through you for quite some time. Did I not pay my money just like the rest? Don’t I count? Please give me an answer.

Nick’s Reply: Hi, Tom. We have mentioned cryptocurrencies a lot… And for good reason. Our average cryptocurrency recommendation is up over 1,100%. That number is astronomical. I wouldn’t have believed it had I not been a part of the team here. But these returns are real and providing life-changing gains to many subscribers.

But we are far from ignoring stocks. Over the past year, we’ve added 11 stocks to the Palm Beach Letter portfolio and six stocks to the Palm Beach Confidential portfolio.

If those portfolios aren’t enough action for you, we also have the Elite 25. This portfolio contains 25 profitable and growing businesses. If you want to own cheap, high-quality companies, click here for the latest update.

And don’t forget our Legacy stock portfolio and Palm Beach Income options trading service. They all come as part of your Infinity subscription.

From Mark G.: This is in reference to Nick Rokke’s article “They’re Happy at This Bar—And Not Because of the $1 Beers.” There’s a problem when you only use one data point. Go directly west 70 some miles on Interstate 74 to Danville, Illinois. Totally different picture. Most heavy industries shut down years ago. Downtown is mostly vacant. Only low paying jobs and high crime. Decline rather than growth. Whether an area is doing well or poorly often depends on the quality of state and local laws. At least you have the option of moving from a poor state to good state.

From William C.: You fail to mention that those warehouse jobs you mention in your article (“They’re Happy at This Bar—And Not Because of the $1 Beers”) pay about half of what the lost factory jobs pay. I don’t agree with your analysis.

Nick’s Reply: Mark, you’re right. State regulations can make a huge difference in economies. We also saw the disastrous impacts of regulations and high taxes in Buffalo, New York. We’ll have more on this in a future article.

William, we agree. Generally, warehouse jobs pay less than factory jobs. I didn’t see any laid-off factory workers at the bar, but the people I did see were encouraged by what they saw. And that is a strong, growing economy in Indianapolis. Jobs are only part of the overall economic picture. If the economy is growing and businesses create jobs, the community (as well as the stock prices of companies) will grow.

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