Cleveland Cliffs Inc (CLF)

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Cleveland-Cliffs: This Is Absolutely Ridiculous

May 25, 2022 11:25 AM ETCleveland-Cliffs Inc. (CLF)



Summary

This is a stock that should be doing well during inflation, as steel costs remain elevated.

The macro situation is worsening, and the market is confused on how to value the name.

While the market remains confused, we are about to see a record year for cash flow.

We can't help but buy this at prescribed trading levels.

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What we like to do as a company is to find stocks that are beaten down unfairly and profit from an inevitable bounce back. Sometimes you have to take a stop loss, much like folding a hand in poker. You give up a small pot by folding the hand to protect against bigger losses, so that you can have the ammunition needed to win a big pot, or in the case of investing, profit from higher share prices. You can in many cases park money long-term and make money. At least in profitable companies. Cleveland-Cliffs (NYSE:CLF) makes money. In our opinion, while it's a cyclical type of investment, steel is still a good place to be. Economic activity remains strong. While there are fears of a hard landing and a recession, given the outlook for the company, this action is absolutely ridiculous. We cannot help but scale into the stock here. It should be guarded somewhat from inflation. Steel prices remain elevated. The stock is trading at silly valuations. We get it, the market is trying to price the stock for future pain, but, right now, we think you can profit on a trade on a rebound in the name. Let us discuss.



This article was written by



Quad 7 Capital