We came across a bullish thesis on Steel Dynamics, Inc. (STLD) on wallstreetbets Subreddit Page by Varro35. In this article, we will summarize the bulls’ thesis on STLD. Steel Dynamics, Inc. (STLD)'s share was trading at $135.07 as of Feb 20^th. STLD’s trailing and forward P/E were 13.90 and 16.69 respectively according to Yahoo Finance.

A steel coil being loaded into a facility for further processing and distribution.

Steel Dynamics (STLD) is emerging as the most compelling steel investment, blending the best aspects of a growth company with the resilience of a cyclical stock. Unlike traditional steel producers, STLD has built a vertically integrated model with strong internal demand for crude steel, allowing it to maintain pricing power and profitability through market cycles. Its expansion into aluminum, fully funded by free cash flow, is set to reshape the U.S. metals industry. The company’s new aluminum plant—America’s first in 40 years—launching in 2026, could replicate the success STLD and Nucor (NUE) had in revolutionizing steel production. If successful, this could create an entirely new growth driver, positioning STLD as the leader in both steel and aluminum.

The broader macro environment is turning favorable, further strengthening STLD’s outlook. Trump’s return to power and rising global protectionism have led to aggressive tariffs on Chinese steel, including downstream products, which is a significant tailwind. U.S. economic growth remains strong, with GDP expanding 2.3% in Q4 and manufacturing PMI turning positive for the first time in nearly two years. Restocking demand could accelerate as buyers adjust to the new trade policies, creating a supply squeeze that benefits STLD. Additionally, steel industry discipline remains intact, with Cliffs (CLF) and U.S. Steel (X) idling furnaces to balance supply. Scrap prices are rising, another sign of strengthening fundamentals.

STLD’s market cap remains undervalued relative to its growth trajectory. Compared to tech stocks, steel companies remain deeply overlooked, setting the stage for a major rerating if capital rotates into industrials. The company’s free cash flow generation and disciplined capital allocation further reinforce its long-term upside. While risks such as sustained high Chinese exports, inflation, and broader market volatility remain, STLD’s positioning as a low-cost, innovative metals producer makes it one of the best ways to invest in the steel and aluminum megatrend.

Steel Dynamics, Inc. (STLD) 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 third quarter which was 38 in the previous quarter. While we acknowledge the risk and potential of STLD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than STLD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.