IBD Stock Analysis
- Cleveland-Cliffs stock is technically extended beyond buy range.
- But the relative strength line hitting a new high is bullish.
- Big breakouts also can lead to big gains.
Industry Group Ranking
* Not real-time data. All data shown was captured at
12:23PM EDT on
The steelmaker sees first-quarter adjusted EBITDA of approximately $500 million and Q2 EBITDA of approximately $1.2 billion. That’s above analyst estimates or $388 million in Q1 and $1.03 billion in Q2.
Cleveland-Cliffs also sees full-year EBITDA of $3.5 billion, assuming hot rolled steel prices averages $975 per net ton for the remainder of the year. Analysts expect EBITDA of $2.87 billion.
The steelmaker plans to announce full Q1 results before the market opens on April 22.
Cleveland-Cliffs became the largest flat-rolled steel producer in North America after acquisitions last year of ArcelorMittal USA and AK Steel, transforming from an iron ore miner.
The revamped company is poised to ride a resurgent car industry and overall manufacturing sector. President Biden’s $2 trillion infrastructure plan is likely to be bullish for steelmakers as the administration has big plans to fix 10,000 bridges and eliminate lead pipes in water supplies.
In Q4, 41% of Cleveland-Cliffs’ $2.1 billion in steelmaking revenue came from the automotive market, 24%, of sales to other steel producers, 18% from the distributors and converters market, and 17% from the infrastructure and manufacturing market.
CLF Stock Chart Analysis
Shares jumped 16.65% to close at 20.11 on the stock market today, the highest finish since 2014. CLF stock has a complicated chart. MarketSmith pattern recognition shows an 18.87 buy point from a consolidation. But a deeper analysis reveals more appropriate buy points of 18.06 from a double-bottom base, as well as 17.88 from a handle.
Technically, Wednesday’s surge means CLF stock is already extended as the buy range maxes out at 18.96 for the double-bottom base, and 18.77 for the handle.
But CLF stock is still sending a buy signal as it broke short-term resistance near 18.77 while the relative strength line hit a new high. And historically, big breakouts often lead to big gains. A close below today’s low of 18.27 would be a sell point.
Still, more conservative investors could also wait for CLF stock to pull back to a more conventional buy range.
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