Can U.S. Steel Stock Return To Pre-Inflation Shock Highs?

United States Steel stock currently trades at $24 per share, about 37% below its pre-inflation shock high of $38.50, seen in March 2022, and has the potential for some gains. U.S. Steel saw its stock trading at $18 in late June 2022, just before the Fed started increasing interest rates, and is now 35% above those levels, compared to the S&P 500 which rose almost 17% over this period. The recent gains in the stock are driven by better-than-expected Q1 2023 results as well as a potential recovery in the company’s European operations.

Returning to the pre-inflation shock level means that U.S. Steel stock will have to gain over 59% from here. However, we do not believe that will materialize anytime soon and estimate United States Steel valuation to be around $27 per share, implying about 10% gains. While we expect the company to benefit from multiple trends such as rising U.S. infrastructure spending as well as greater government incentives for U.S. manufacturing, there are near-term macro headwinds due to high-interest rates which could weigh on steel demand and investments. Our detailed analysis of United States Steel upside post-inflation shock captures trends in the company’s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock’s performance during the 2008 recession.