Historically, tumultuous times offer some of the best opportunities to buy stocks, and the market's recent mess surely qualifies. And though integrated steel producer U.S. Steel (NYSE: X ) has already more than doubled from its March 2009 lows, many investors expect even better times ahead.
In our Motley Fool CAPS community, 93% of the 2,060 investors rating the company are bullish, so there's no shortage of reasons why U.S. Steel will thrive, three of which I've highlighted below.
But here at The Motley Fool, we're all for looking at both the good and bad sides of an investment. Once you're done with this article, you can read the case against the stock, weigh in with your own comments below or rate U.S. Steel yourself in CAPS.
1. Improving quarterly performance
While the economy still faces big hurdles, it has come a long way since last year. Major railroads such as Union Pacific (NYSE: UNP ) and CSX (NYSE: CSX ) -- often seen as a barometer of the overall economy -- posted big gains in quarterly profits recently. And investors were pleased to see the improvement in U.S. Steel's second-quarter results as well. Similar to peer Steel Dynamics' (Nasdaq: STLD ) doubling of quarterly sales, U.S. Steel's sales jumped 120%, while shipments doubled, giving some investors more confidence in a return to profitability.
2. Long-term demand
Even with signs of a slowing recovery, many CAPS members hold a bullish long-term outlook for global steel demand that's shared by industry peers. ArcelorMittal (NYSE: MT ) believes the destocking in China is only temporary and sees solid market fundamentals there. And Rio Tinto's (NYSE: RTP ) long-term steel demand outlook has it planning to significantly boost iron ore capacity in the coming years. Meanwhile, Russia's Mechel (NYSE: MTL ) has been launching new production lines and entering new markets -- all signs of confidence in continued steel demand.
3. Beaten down shares
With U.S. Steel's shares well off its 52-week highs and far from its prerecession levels, some investors are eyeing its shares as a good long-term investment. It sports a 30% estimated five-year annual growth rate, and a solid majority of CAPS members envision the company maintaining a strong global position in steel.