Steel Dynamics, Inc. (STLD): A Bull Case Theory

We came across a bullish thesis on Steel Dynamics, Inc.  on Stock Picker’s Journey’s Substack by Gregg Jahnke. In this article, we will summarize the bulls’ thesis on STLD. Steel Dynamics, Inc. 's share was trading at $127.56 as of July 31^st. STLD’s trailing and forward P/E were 18.51 and 14.29 respectively according to Yahoo Finance.

Steel Dynamics (STLD) has been added to the Model 25 portfolio at $131, replacing AES, in a rare top-down decision driven by macroeconomic expectations rather than valuation. While the author typically favors bottom-up stock picks like Pepsi and Gentex, which were purchased at near-decade lows, the potential passage of the BBBill and a possible economic surge in 2026 prompted this more thematic move. STLD stands to benefit from pro-growth industrial policies, and with momentum shifting in favor of the bill’s passage, exposure to a high-quality cyclical stock became desirable.

A standout first-quarter earnings call reinforced conviction, as STLD’s aggressive capital expenditure plans—particularly its efforts to reshape the aluminum industry—signal long-term vision. Notably, the company has repurchased 40% of its stock over the past decade and maintains a clean balance sheet, having recently refinanced debt with manageable near-term maturities. Although other aluminum plays like Century, Alcoa, and Kaiser were considered, STLD was viewed as superior, even compared to Nucor (NUE), due to its aluminum exposure.

Wall Street’s focus on short-term earnings has led to a misunderstanding of STLD’s strategic positioning, as highlighted by analyst John Tumazos’s incisive questioning on the Q1 call. The company's spread-based model in scrap steel and aluminum is seen as lower risk than perceived, with significant upside potential. Strong institutional support from Victory Capital, Norges Bank, and T. Rowe Price adds credibility to the investment. Though STLD has underperformed recently and issued a soft Q2 outlook, the long-term case for its role in rebuilding U.S. manufacturing justifies the timing of this buy.

Previously, we covered a bullish thesis on Steel Dynamics, Inc. (STLD) by Gregg Jahnke in February 2025, which highlighted the company’s capital discipline, low-cost structure, and long-term potential. The company’s stock price has depreciated approximately by 4% since our coverage due to near-term macro headwinds. Gregg Jahnke shares a similar view but emphasizes a top-down, policy-driven case based on expected 2026 growth.

Steel Dynamics, Inc.  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held STLD at the end of the first quarter which was 45 in the previous quarter. While we acknowledge the potential of STLD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.