Cleveland-Cliffs (NYSE:CLF) delivered a 15% one-month destructive motion publish its earnings announcement on February 24. The corporate reported a larger-than-expected lack of $0.68 per share and missed income expectations, resulting in a pointy decline in investor confidence. The worldwide metal market is dealing with weak demand and oversupply, which has put downward strain on metal costs. Cleveland-Cliffs, as a raw-material-heavy firm, is especially affected by these circumstances. Nonetheless, tariffs on imported metal may benefit home producers like Cleveland-Cliffs – see Buy Cleveland-Cliffs Now for the fuller image. Even so, particularly so, buyers may profit from some reminiscence refresh.
Right here’s the factor, in a downturn, Cleveland-Cliffs can lose – no – there may be proof, from as latest as in 2022, that Cleveland-Cliffs inventory misplaced as a lot as 60% of its worth over a span of just some quarters. Now, in fact, particular person shares are extra unstable than a portfolio – and on this surroundings if you happen to search upside with much less volatility than a single inventory, take into account the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns better than 91% since inception.
Picture by Bakhrom Tursunov from Pixabay
Why is that related now?
Once more, whereas Cleveland-Cliffs is perhaps promising nice issues with their $1.5 billion inventory buyback program, potential enhancements in metal demand, and eventually tariffs on imported metal benefiting home producers, there’s a bigger threat to the U.S. economic system, which is price factoring in proper now.
What’s that? Certain, inflation fears have subsided, however they aren’t extinguished. If something, Trump’s daring strikes on tariffs and immigration have stoked fears that inflation may come again. All of this implies the U.S. economic system may hit a tough spot, and even worse, hit a recession – our evaluation right here on the macro image. Once you consider increased geopolitical uncertainty as a result of daring strikes from the brand new Trump administration, these are vital dangers. In spite of everything, the Ukraine- Russia conflict continues to be ongoing, commerce is unsure, and everybody, together with long-term allies Canada, Mexico, and Europe, at the moment are being known as to the negotiating desk.
Right here’s the particular Cleveland-Cliffs inventory information that issues us
CLF inventory has fared a lot worse than the benchmark S&P 500 index throughout a few of the latest downturns. Whereas buyers have their fingers crossed for a comfortable touchdown by the U.S. economic system, how dangerous can issues get if there may be one other recession? Our dashboard How Low Can Shares Go Throughout A Market Crash captures how key shares fared throughout and after the final six market crashes.
Inflation Shock (2022)
• CLF inventory fell 64.1% from a excessive of $33.07 on 28 March 2022 to $11.87 on 3 November 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The inventory is but to recuperate to its pre-Disaster excessive
• The best the inventory has reached since then is $22.83 on 3 April 2024 and presently trades at round $10 per share
Covid Pandemic (2020)
• CLF inventory fell 59.6% from a excessive of $7.60 on 19 February 2020 to $3.07 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 7 October 2020
World Monetary Disaster (2008)
• CLF inventory fell 89.9% from a excessive of $119.19 on 30 June 2008 to $12.01 on 2 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The inventory is but to recuperate to its pre-Disaster excessive
Defending Wealth
In abstract, whereas presently Cleveland-Cliffs inventory is comparatively low-cost; it trades at solely about 0.26x final 12 months’s gross sales. Now, Cleveland-Cliffs revenues declined final 12 months, and the consensus estimates level to simply about 7% progress this 12 months. So sure, whereas Cleveland-Cliffs ought to profit with the not too long ago imposed tariffs – ask your self the query: if you wish to maintain on to your Cleveland-Cliffs inventory, will you panic and promote if it begins dropping to $8, $5, and even decrease ranges? Holding on to a falling inventory shouldn’t be at all times straightforward. Trefis works with Empirical Asset Administration – a Boston space wealth supervisor, whose asset allocation methods yielded constructive returns throughout 2008/2009 timeframe, when S&P misplaced greater than 40%. Empirical has included the Trefis HQ Portfolio on this asset allocation framework to offer shoppers higher returns with much less threat versus the benchmark index; much less of a roller-coaster trip, as evident in HQ Portfolio efficiency metrics.
Whereas buyers have their fingers crossed for a comfortable touchdown by the U.S. economic system, how dangerous can issues get if there may be one other recession? See the final six market crashes in contrast.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Complete [2] |
| CLF Return | -6% | 8% | 27% |
| S&P 500 Return | -5% | -4% | 153% |
| Trefis Strengthened Worth Portfolio | -6% | -8% | 552% |
[1] Returns as of three/18/2025
[2] Cumulative whole returns because the finish of 2016
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
