As private investments in construction activities rise, along with large-scale federal initiatives, the basic materials industry is expected to grow significantly over the long term. Thus, basic materials stocks Reliance Steel & Aluminum Co. (RS) and Cleveland-Cliffs Inc. (NYSE:CLF) will likely benefit. But which of these stocks is a better buy now? Read more to find out.Reliance Steel & Aluminum Co. (RS) in Los Angeles is the largest metals service center company in North America. The company provides a wide range of products from facilities spread across more than 300 locations in 40 states and 13 countries. Cleveland-Cliffs Inc. (CLF) is an independent iron ore mining company operating in two segments: Mining and Pelletizing, and Metallics. CLF is the largest flat-rolled steel company and the largest iron ore pellet producer in North America. It is based in Cleveland, Ohio.
The basic materials industry has been rebounding rapidly over the past couple of months, driven by the rise in construction and manufacturing activities. A bipartisan infrastructure deal, under President Biden’s “Build Back Better” initiative, which is expected to hit the senate floor in mid-July, is expected to facilitate sustainable long-term growth for the industry. This should enable RS and CLF to generate solid returns in the near term.
RS’ shares have gained 13% over the past six months, while CLF has returned 16.1%. Also, RS’ 23.9% gains year-to-date compare with CLF’s 43.8% returns. In terms of their past year’s performance, CLF is the clear winner with 306.6% gains versus RS’s 61.1%.