This Steel Company’s Shares Are up More Than 50% in Just Two Months

Sometimes it’s worth revisiting what columnists have said about a stock to see just how close to the mark they came. 

In the case of a steel maker profiled two months ago, the call was pretty close. 

In February, Real Money Columnist Stephen “Sarge” Guilfoyle reviewed the latest financials for Cleveland-Cliffs  (CLF) – Get Cleveland-Cliffs Inc Report. 

The company had just set records for revenue and net income in 2021.

During the fourth quarter, Cleveland-Cliffs reported adjusted EBITDA of $1.5 billion, an increase of $286 million from a year ago. The company also bought Ferrous Processing and Trading Company, paid down $150 million in principal debt and lowered its pension liabilities, net of assets by about $1 billion.

At the time, Guilfoyle argued that the stock was a momentum play. 

“I have traded CLF in the past and the name has been good to me.” Guilfoyle wrote at the time. “From an equity perspective, I would rather buy this name on momentum above the 200-day line than right here,”

The company’s balance sheet “is not in bad shape overall,” Guilfoyle wrote. “It’s not perfect, but it is manageable.”

One issue at the time was that the company’s net cash position was “tiny, down to $48 million from $112 million a year earlier,” he wrote. However, the company utilized the cash to manage its existing liabilities and it is why “they are going to get a hall pass from me on this one,” Guilfoyle wrote. 

Shares have risen sharply since Guilfoyle wrote. In fact, they are up about 66%. 

Cleveland-Cliffs is slated to report its latest results on Friday, with Wall Street analysts looking for earnings of $1.51 a share.