Steelmaker Nucor is a safe bet amid the Iran war, according to UBS, and its recent selloff could present investors with a buying opportunity. The investment firm upgraded the stock from neutral to buy. The company also raised its price target to $190 from $184, implying a 15% upside from Wednesday’s closing price. “This decline presents a buying opportunity in a relatively isolated market,” analyst Andrew Jones said in a note to clients. “We believe U.S. steel producers are largely insulated from the Iranian conflict.” NUE YTD Mountain NUE Year to date The war has caused supply chain bottlenecks, particularly affecting imports and exports of manufactured goods such as chemicals, steel and aluminum. Amid this turmoil, steel stocks, including Nucor, suffered. The VanEck Steel ETF (SLX) has plunged nearly 11% since the start of the conflict. Nucor has fallen 6% over the past month. However, UBS said the company’s stock could rise due to a combination of tailwinds, including federal contracts for steelmakers and a decline in U.S. steel imports. “We like the NUE setup because it has little direct impact from growth in energy (and) projects (Bur Mill, Tower and Coatings, Brandenburg, VA) in an environment of higher federally supported prices and production,” Jones wrote. Earlier this month, a subsidiary of AMI Metals announced it had awarded a government contract worth approximately $2.2 billion to “build a wall” along the U.S.-Mexico border. This is a bullish development for other metal producers, including Nucor. Meanwhile, President Donald Trump raised steel tariffs from 25% to 50% last June, increasing the cost of procuring building materials from overseas. UBS’s call is in line with Wall Street consensus. Two-thirds of the 18 analysts covering Nucor have a buy or strong buy rating on the stock.
