Commercial Metals (CMC) Hits 52-Week High: What's Driving It?

Commercial Metals Company CMC scaled a fresh 52-week high of $44.62 during the Apr 18 trading session before retracting to close at $43.66. Forecast-topping earnings results in second-quarter fiscal 2022, solid steel demand stemming from robust construction and infrastructure activities as well as higher steel prices have contributed to this price appreciation.

Price Performance

The company’s shares have gained 54.7% in the past year compared with the industry’s growth of 25.9%.

Image Source: Zacks Investment Research

Driving Factors

Commercial Metals will continue to benefit from robust finished steel demand across most of its product lines, supported by its growing downstream backlog and solid levels of new construction work entering the project pipeline. Solid highway infrastructure activities and healthy construction markets in North America are driving strong rebar and wire rods demand.

Demand conditions within Central Europe remain strong. The Polish construction market continues to grow, while consumption of merchant and wire rod products is supported by expanding manufacturing activity in Poland. The company believes that seasonal factors, new contract wins, strong construction backlog in North America and strength across the key end markets in North America and Europe will continue supporting the solid steel shipment volumes in third-quarter fiscal 2022.

Recently, the U.S President said that construction materials purchased for projects funded by the Infrastructure Investment and Jobs Act passed last November must be produced within the United States. This will fuel steel demand for U.S steel producers like Commercial Metals. CMC will benefit from higher steel prices, thanks to demand upsurge in major end-use markets and tight supply conditions partly due to the Russia-Ukraine conflict and hefty Section 232 tariffs on steel imports.

Commercial Metals continue to gain from its ongoing network optimization efforts, generating additional margin and reducing costs in the near future. The company is progressing well with constructing a third micro mill Arizona 2, which will be the world's first mill to produce merchant bar quality (MBQ) steel products. The new mill will provide the company with 400 thousand tons of rebar capacity to serve incremental infrastructure demand and about 150 thousand tons of merchant bar. Additionally, the company ramped up the construction of its fourth new micro mill, MM4, which will enhance its position in the Eastern United States and boost its ability to serve markets in the Northeast, Mid-Atlantic and Midwest. Both MM4 and Arizona projects will receive 1.2 trillion in funding over the five years under the Infrastructure Investment and Jobs Act.

Zacks Rank & Other Stocks to Consider

Commercial Metals currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the basic materials space are The Mosaic Company MOS, AdvanSix Inc. ASIX and Allegheny Technologies Incorporated ATI.

Mosaic has a projected earnings growth rate of 143.5% for the current year. The Zacks Consensus Estimate for MOS' current-year earnings has been revised 39.7% upward in the past 60 days.

Mosaic’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once. It delivered a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 132.4% in a year and currently sports a Zacks Rank #1.

AdvanSix has a projected earnings growth rate of 54.7% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 43.6% upward in the past 60 days.

AdvanSix’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 23.6%. ASIX has surged 77.6% in a year. The company sports a Zacks Rank #1.

Allegheny, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 684.6% for the current year. The Zacks Consensus Estimate for ATI's earnings for the current year has been revised 20% upward in the past 60 days.

Allegheny’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 127.2%. ATI has rallied around 37% over a year.

Just Released: Zacks' 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +25.4% per year.

These 7 were selected because of their superior potential for immediate breakout. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.