Cleveland-Cliffs: A Recession And A Buying Opportunity
Jul. 04, 2022 9:36 AM ETCleveland-Cliffs Inc. (CLF)43 Comments30 Likes
Leo Nelissen
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Summary
Cleveland-Cliffs is down 50% from its 52-week highs as a result of recession risks and investors who are de-risking their portfolios.
The company has gone through an impressive transition allowing it to benefit from secular tailwinds and higher-margin steel markets.
Thanks to the sell-off, CLF is trading at attractive prices, allowing investors to start buying some exposure for long-term investments.
Introduction
I've covered Cleveland-Cliffs (NYSE:CLF) frequently prior to the pandemic, when I followed the company's transition from a diversified commodity play to a US-focused producer of iron ore. Then, after the pandemic, the company expanded its business, becoming North America's largest flat-rolled steel producer. I haven't covered the stock publicly since late 2019 as I've been working a lot on the stock with (larger) private clients. I wanted to avoid a conflict of interest. Now, the coast is clear. Investors and traders have abandoned CLF to some extent, sending shares down 50% from recent highs. We're at a tricky point in the cycle as high long-term expectations meet midterm recession fears. It's bad news for impatient traders, but good news for investors looking to buy quality "value" exposure.
This article was written by
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Leo Nelissen
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I'm a macro expert for Intelligence Quarterly. I discuss a wide range of topics including long-term dividend (growth) investments, mid-term trading opportunities, commodities, rates, and related. My DMs are always open. Also, I'm on Twitter (@Growth_Value_) where I share charts and thoughts on topics I discuss on Seeking Alpha and on Intelligence Quarterly. Long-Term Dividend HoldingsPSA, DUK, HD, PEP, RTX, UNP, VLO, DE, ABBV, CAT, HBAN, NSC, LHX, XOM, HII, AAPL, XEL, CVX, CP, LMT, NOC, NDAQ, CME, CSX, DHR
Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This article serves the sole purpose of adding value to the research process. Always take care of your own risk management and asset allocation.
