3 Discounted Steel Stocks You Can DCA Into Today
Most investors can agree that the industrial sector's current state is one of neglect, as most of the attention (and capital) has shifted to the more exciting stories in the artificial intelligence race in today’s market. This means that a potential rotation could be triggered in the future, no matter how vague this future may be.
One of the best ways for investors to start exposing their portfolios to setups like these is to implement something called dollar-cost averaging (DCA). This means that investors will choose both a set date and amount to invest in a single name or a basket of names in an area like the industrial sector, which shows significant upside potential and a gap to fill.
Of course, choosing the best names in this area can significantly improve the results of a DCA strategy, which is where names like Cleveland-Cliffs Inc. (NYSE: CLF), Commercial Metals Co. (NYSE: CMC), and even Steel Dynamics Inc. (NASDAQ: STLD) come into play.
There are obvious reasons why investors should consider these stocks for their DCA basket, as they could offer the best of both safety and upside potential in the coming months.
Cleveland-Cliffs Stock: A Deep Discount Story
Considering the entire steel industry, all peers are trading at an average of 90% of their 52-week high prices. This is why Cleveland-Cliffs stock should be viewed as a potential catch-up play, as it is currently the outlier, trading at only 68% of its 52-week high.
Next is the recently bullish view coming out of Wall Street, where Phillip Gibbs, an analyst from KeyCorp, decided to boost his rating on Cleveland-Cliffs stock from Sector Weight to Overweight. Not only did the sentiment improve for this stock, but its current perceived valuation also improved.
This analyst decided to stand out of the pack and place a $14 per share price target on Cleveland-Cliffs stock, which, compared to today’s prices would mean not only flirting with 52-week high levels and closing that gap to peers, but also an approximate 40% upside potential for investors to expose their portfolios to in a DCA strategy.
Another gauge to justify this view for Cleveland-Cliffs stock can be taken from what institutional buyers are doing with it. As of late July 2025, those from JB Capital decided to boost their holdings in the stock by 14.6% to net their position at $1.2 million. The fact that this isn’t the largest holding speaks to the current interest in slowly building a bigger position through DCA.
A Premium Positioning for Commercial Metals Stock
Commercial Metals stock stands out due to its exposure to aluminum and steel production in the United States and China. This makes it an immediately valuable business opportunity that diversifies the ongoing risks and uncertainties stemming from the trade tariff negotiations between the two countries.
Investors can expect big things from this fundamental setup, especially as Wall Street analysts now see the company reporting up to $1.25 in earnings per share (EPS) for the fourth quarter of 2025, in other words, a net increase of 70% from today’s reported $0.74 EPS.
Now, most investors know that where EPS growth goes, so does the stock price, and this is why the entire market is now willing to pay up to 167.3x the price-to-earnings (P/E) ratio, a significant premium compared to the 109.3x average P/E for the materials sector today.
Markets are often willing to overpay for names that they expect will outperform not only their peers but also the broader market. Commercial Metals stock's massive EPS growth and diversification between the United States and China justify a premium.
Wall Street Warms Up to Steel Dynamics Stock
As of mid-July 2025, Wall Street analysts seem to have figured out that Steel Dynamics stock is one of the clear winners in the steel industry. This might be why an analyst like Bill Peterson from J.P. Morgan Chase decided to boost his valuation target from $138 per share to a much higher $150 valuation.
This new view implies that the stock could deliver up to 20% upside moves in the coming months and quarters, but like others, this one is also justified. Wall Street analysts also anticipate significant EPS growth in the coming quarters, with a target of $2.88 for the fourth quarter of 2025.
Compared to today’s reported $2.01 in EPS, this suggests investors could be positioned for a 43% growth rate in earnings, which supports the double-digit upside potential seen in these valuation targets as well. This would make it another perfect candidate for starting a DCA strategy today for the coming quarters.
Just as in the other names on this list, smart money has already started to apply this strategy, as those from Robeco Institutional Asset Management boosted their position in Steel Dynamics stock by 40.6% as of mid-July 2025 for a net holding of $214.5 million today, and another vote of confidence for this winner.
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