What happened

Shares of United States Steel (X -2.32%) surged 43.1% in the first six months of 2021, according to data provided by S&P Global Market Intelligence. The stock didn't just ride the wave of optimism in infrastructure repair and upgrade; it also got a leg up from analyst upgrades and strong numbers.

So what

It was only after March that U.S. Steel shares started to rally. Just as manufacturing activity started to pick up with the economy's reopening, President Joe Biden's unveiling of a nearly $2 trillion infrastructure plan later in March lit a fire under steel stocks. That Biden launched his plan just weeks after his election as the President showed how serious he is about rebuilding America's infrastructure -- something that's long overdue.

Importantly, U.S. Steel entered the recovery phase with a meaningful acquisition under its belt: It acquired a full stake in Big River Steel in January, a steel company that owned the first Leadership in Energy and Environmental Design (LEED)-certified facility in the U.S. and doubled its annual steel production capacity in 2020. This facility is a significant addition to U.S. Steel's portfolio as it's a mini-mill, which is more cost-effective and flexible as compared to traditional steel mills that use blast furnaces. (The use of mini-mills, in fact, is one of the strongest reasons why Nucor could race past competitors and become the largest and most efficient steel producer in the U.S.)

A person cutting steel pipes in a factory.

Image source: Getty Images.

Thanks to the acquisition and higher steel prices, U.S. Steel grew sales by 33% and earned $91 million in net income in its first quarter versus a steep loss of $391 million in the year-ago quarter.

Most steel companies, in fact, reported strong earnings, triggering a flurry of stock upgrades from analysts. U.S. Steel stock received much love from analysts, and that helped its stock maintain momentum. Here's a glimpse:

  1. May 4: Credit Suisse more than doubled its stock-price target to $35.
  2. May 11: Morgan Stanley upgraded its stock-price target to $32.
  3. June 4: UBS doubled its stock-price target to $30.

With analysts even calling it a steel super cycle and the price of hot-rolled coil (a key steel product used in construction) hitting record highs, investor interest in U.S. Steel stock has remained high in recent months.

Now what

If there's one thing that could keep U.S. Steel shares humming, it's another strong quarterly report: U.S. expects to earn nearly $1.2 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and $880 million in adjusted net income in the second quarter compared with losses in the year-ago period. The company also plans to repay a large amount of debt this year, and that's something investors must watch out for in its upcoming Q2 earnings report on July 29 as lower debt should position U.S. Steel to exploit opportunities under Biden's infrastructure-spending program.