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3 Small Cap Steel Stocks to Buy Before an Infrastructure Bill is Passed

Stock MarketsJun 03, 2021 06:30PM ET
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© Reuters. 3 Small Cap Steel Stocks to Buy Before an Infrastructure Bill is Passed

President Biden’s proposed infrastructure spending bill is expected to facilitate transformational progress in the U.S. economy and accelerate the demand for steel. This, coupled with substantial private investments and tariffs, should allow steel prices to achieve fresh highs soon. Thus, we think small-cap companies Usinas Siderúrgicas de Minas Gerais S.A. (USNZY (OTC:USNZY)), Schnitzer Steel (SCHN), and Insteel Industries (NYSE:IIIN) are well-positioned to outperform established players. So, read on and let’s evaluate these names.On March 31, President Biden introduced an infrastructure spending package that totaled more than $2 trillion with the goal of rehabilitating U.S. infrastructure and the U.S. economy. Biden has characterized the fiscal stimulus package as a “once-in-a-generation” investment that would upgrade the country’s existing infrastructure base and bring “transformational progress” to the economy. The proposed plan is currently being negotiated in the U.S. Senate, where the Republican party made a $928 billion counteroffer to Biden’s proposal on May 27.

The United States’ infrastructure sector is looking at a potential trillion-dollar investment over the next eight years. The steel industry, which is currently witnessing soaring prices given the high global demand, should hit fresh highs soon. Section 232 tariffs placed on steel imports by the previous administration have led to nearly $15.70 billion in new capacity investments, allowing the domestic steel industry to improve. On the global front, steel production had increased 23% year-over-year in April.

The steel industry boom is expected to increase if an infrastructure bill is passed, given steel’s use in construction. Given this backdrop, we think small-cap steel stocks Usinas Siderúrgicas de Minas Gerais S.A. (USNZY), Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), and Insteel Industries, Inc. (IIIN) could be attractive additions to one’s portfolio, based on their immense growth potential.

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3 Small Cap Steel Stocks to Buy Before an Infrastructure Bill is Passed
 

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