5 Stocks to Buy on Trump's New Steel Tariffs - Nucor (NYSE:NUE), Reliance (NYSE:RS)

The Trump administration enacted new steel and aluminum tariffs in mid-February, and businesses (and investors) could begin to feel the effects soon. The new tariff calls for a 25% tax on imported steel and aluminum products with no exemptions, which is another shot across the bow at Canada and Mexico, the #1 and #3 steel exporters to the US.

With the new tariffs, American-based steel and aluminum tariffs now have a competitive advantage over their competitors abroad.

Here are the five stocks that will benefit the most from this new dynamic.

Steel prices have been flat in the US since the announcement, and stable commodity prices could provide a headwind to domestic steel producers.

While tariff costs are eventually passed to consumers in one fashion or another, companies that manufacture steel and aluminum in the United States have a distinct advantage over their import-heavy counterparts. If importers face a 25% tariff, they'll be forced to raise prices to carry the added cost.

If a domestic steel manufacturer knows its competition will be forced to raise prices 25%, it won't sit idle – it'll also increase prices. And since the domestic producer isn't incurring any added costs, more revenue will be retained as profit, expanding margins and making the stock more attractive to investors.

Today, we'll look at five stocks with strong fundamentals that could gain from tariffs on imported steel. Each company possesses at least two of the following traits: sound valuation, above-average margins, and sufficient cash flow to manage increased capacity.

Reliance Inc. (NYSE:RS)

Formerly known as Reliance Steel and Aluminum Co., the firm has been manufacturing and distributing important metals since 1939. According to its website, Reliance Inc. sells more than 100,000 products, ranging from stainless, carbon, and specialty steel to titanium, brass, and copper

Reliance is well-positioned to increase production thanks to its hefty free cash pile, which sits at just under $1 billion as of this writing. Despite having a smaller market cap than competitors like Nucor and Steel Dynamics, Reliance has a better cash flow situation with a comparable profit margin (6.33%).

And while the stock might be pricier than its peers at 14 times forward earnings, the company does have the capacity to hire more workers and expand production, especially if demand for domestic steel surges. Benzinga Edge scores the stock similarly, giving it a 67.74 score for Value and 67.61 for Quality.

Nucor Corp. (NYSE:NUE)

Nucor is the largest domestic steel manufacturer in the United States, with a market cap of more than $29 billion and nearly 33,000 full-time employees. It manufactures and sells steel products through three divisions: Steel Mills, Steel Products, and Raw Materials. With its vast product range and expansive customer base across North America, Nucor is ready to take advantage of tariffed competitors. In fact, the company has already raised prices on hot-rolled coil steel six times since Inauguration Day for a cumulative bump of 28%.

Nucor's stock may also be coiled for a move higher. After being cut nearly in half between April and December 2024, the stock bounced higher to start 2025, jumping from $112 to $142 before retreating back under $130 in the first week of March. This pullback could be an opportunity for investors; NUE shares score highly on Benzinga Edge's Value (77.56) and Quality (70.56) scores, and the stock trades at just 12 times forward earnings. The company is also sitting on an $800 million cash pile, which never hurts in the eyes of investors.

Benzinga Edge's daily trade ideas and market analysis tools are now at your fingertips. Discover these cutting-edge insights right here.

Olympic Steel Inc. (NYSE:ZEUS)

Despite owning one of the best stock tickers on US exchanges, Olympic Steel is the smallest company listed here, with a market cap of just $348 million and less than $2 billion in annual revenue. The stock has also declined more than 50% since peaking at over $73 in April 2024. ZEUS needs a catalyst to wake up, and tariffs on imported steel might be just the thing to do it.

Olympic Steel rates highly in Benzinga Edge's Value score (88.07), but its Momentum score (14.43) is approaching the dumpster. Trends can change quickly, however, and ZEUS shares are close to falling into oversold territory on the Relative Strength Index (RSI). Other appealing valuation metrics to consider: a price-to-earnings ratio of just 10.5, a price-to-sales rate of 0.18, and EPS growth of more than 42% over the last five years.

United States Steel Corp. (NYSE:X)

US Steel Corp has made plenty of headlines lately for its off-again, on-again merger with Japan's Nippon Steel. But for now, the company remains its own entity, and shares have surged higher to start 2025 (although with some choppy waters along the way).

US Steel was once the industry’s beacon, with a history dating back more than 100 years. An NFL team was even named after it! However, the company has suffered through multi-year profit declines and faces fading relevance in the domestic steel industry. Is a turnaround possible? X shares get the best Benzinga Edge Growth score of our picks at 72.02, plus a 74.76 in Value. The stock is up 21% year-to-date and trades at just 11 times earnings. While the fundamentals haven't fully materialized yet, the technical trend is pointing upward.

Steel Dynamics Inc. (NASDAQ:STLD)

Steel Dynamics is another massive domestic manufacturer with a $19 billion market cap and 13,000 full-time employees. In 2024, the company earned $17.5 billion in revenue and trades at 16 times forward earnings.

The stock might be expensive in terms of valuation compared to other companies on this list, but STLD has several advantages. Its 8.8% profit margin is the highest among domestic steel producers, and its return on equity (ROE) is 17%, a considerable figure for a steel manufacturer. In February, the company also announced favorable news for investors with a 9% cash dividend increase and a $1.5 billion share repurchase agreement. The stock also has the highest Benzinga Edge Momentum score amongst US steel companies at 61.56, with a 77.81 score for Value and 66.68 for Quality. Steel Dynamics is a well-rounded stock, although its lack of free cash flow could pose problems for future capacity constraints.

Get Ahead of Tomorrow's Biggest Earnings Moves

When Walmart reports earnings tomorrow, the ripple effects could shake the entire market. Our Earnings Command Center gives you real-time alerts, key data, and actionable insights—before the news breaks. Get My Earnings Edge

Image via Pixabay

STLDSteel Dynamics Inc

$190.57-%

Market News and Data brought to you by Benzinga APIs

To add Benzinga News as your preferred source on Google, click here.