What happened
Cleveland-Cliffs (CLF -1.64%) shares rocketed by 12.7% as of 3:26 p.m. ET Thursday and hit a new 52-week high in afternoon trading. In fact, that's understating the matter: The steel stock last hit these levels in 2013. So if you're guessing something big just happened, you're right.
So what
Russia's invasion of Ukraine has hit nearly every sector in some way, but the commodities sector is feeling an extreme degree of heat from it, and that includes metals like steel.
Both Russia and Ukraine are important exporters of pig iron, a key steel-making raw material. Supply has slumped due to sanctions on Russia and the suspension of manufacturing activities in Ukraine, sending prices of whatever pig iron is available through the roof. Prices for steel and steel products have followed suit. Prices for steel rebar in Europe, for instance, are also hitting record highs.
Image source: Getty Images.
On Thursday morning, JP Morgan projected that steel prices would rise even higher in 2022, with analyst Michael Glick posting overweight ratings on several steel stocks. Glick, however, sees Cleveland-Cliffs as the top steel stock right now, given its product portfolio. Vertically integrated Cleveland-Cliffs is not only the largest producer of flat-rolled steel and iron ore pellets in North America, it also mines iron ore.
Glick put a 12-month price target of $44 a share on Cleveland-Cliffs, implying a whopping 51% upside from the stock's Wednesday closing price.
Now what
If memory serves, Glick's price target is among the highest any analyst has placed on Cleveland-Cliffs in recent years. It's therefore not surprising to see the stock skyrocket based on it. After all, commodity stocks can be volatile, and it's not every day that an industrial metal company is viewed as having as much as 50% upside potential in the near term.
