CLF - Cleveland-Cliffs: Q1 Dip Provides Great Discount

2024-04-25 14:46:41 ET

Summary

• Cleveland-Cliffs' share price has dropped 16% in April, presenting a great bargain for long-term investors.
• The possibility of Cleveland-Cliffs acquiring U.S. Steel is gone, but the company plans to use its capital for buybacks now at very attractive prices.
• Despite a disappointing Q1, Cleveland-Cliffs' gross margins are improving, and the company maintains its guidance for 2024.
• CLF has also shown that it can have its pick of customers and resist efforts to boycott their pricing.

At the start of the month, I rated Cleveland-Cliffs ( CLF ) a Buy, primarily reflecting on its FY 2023 results and the big picture. In it I concluded:

Sometimes an exciting new story, like a contested merger or acquisition, gets our attention. In some cases, it can be easy to forget what is right in front us: a wonderful business with all the right components for success. With its internal sourcing of iron and scrap, strong alliance with unions, and a keen eye for capital allocation, Cleveland-Cliffs is poised to deliver strong returns to long-term investors at these prices.

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