The U.S. steel industry has bounced back in a big way and the current administration’s tough stance on fair trade has had an impact. However, the biggest impact has come from China, where output has been substantially decreased and many plants were closed during the winter. While Chinese winter steel production cuts are coming to an end, there is every reason to believe that 2018 will be another solid year for domestic companies.

A new Jefferies research report makes the case that while impending supply from China is probably on the way, the outlook here remains solid, and it explained why:

As Chinese winter steel production cuts near their end, investors are concerned that a snap-back in supply may weigh on prices into spring. But, our analysis shows that seasonal demand will more than outpace supply growth, and with an insufficient inventory buffer available, price risk is to the upside. Chinese exports should continue to plunge, to the benefit of our European and US coverage.

We screened the Jefferies steel coverage universe and found four stocks rated Buy with over 20% upside to the Jefferies price targets. All make good sense for growth accounts looking to play the sector and the potential for huge infrastructure spending resulting from the president’s plan for America.

ArcelorMittal

This is the top pick at Jefferies and makes a solid holding. ArcelorMittal S.A. (NYSE: MT) is the self-described world’s leading steel and mining company, with a presence in 60 countries and an industrial footprint in 19. The company was formed from the merger of Arcelor and Mittal Steel in 2006. It is the leader in all major global markets, including automotive, construction, household appliances and packaging. Its industrial presence in Europe, Asia, Africa and America gives it exposure to all the key steel markets, from emerging to mature.

The company is also one of the world’s five largest producers of iron ore and metallurgical coal and the mining business is an essential part of the corporate growth strategy. With a geographically diversified portfolio of iron ore and coal assets, ArcelorMittal is strategically positioned to serve its network of steel plants and the external global market. While its steel operations are important customers, the company’s supply to the external market is increasing rapidly.

The Jefferies target price for the stock is $42, and the Wall Street consensus target is $40.55. Shares closed on Wednesday at $35.58.

Cleveland-Cliffs

Jefferies recently initiated this mining play with a Buy rating. Cleveland-Cliffs Inc. (NYSE: CLF) is a mining and natural resources company that produces and supplies iron ore. It operates four iron ore mines in Michigan and Minnesota, as well as the Koolyanobbing iron ore mining complex in Western Australia.

Cleveland-Cliffs sells its products to integrated steel companies and steel producers in the United States and the Asia Pacific. The company was formerly known as Cliffs Natural Resources and changed its name in August 2017.

Jefferies has a $9 price objective, and the consensus estimate is $7.88. Shares closed Wednesday at $7.32.

Commercial Metals

Shares of this lesser known company provide solid value for investors at current trading levels. Commercial Metals Co. (NYSE: CMC) manufactures, recycles and markets steel and metal products, and related materials and services in the United States and internationally.

As one of the leading suppliers to the nonresidential construction sector, Commercial Metals has revived as that area of the market has picked up. The U.S. Architecture Billings Index (ABI), an economic indicator that provides 9-to-12-month growth forecast of nonresidential construction spending activity, which has shown very consistent growth.

Shareholders receive a 2.01% dividend. The $29 Jefferies price target compares with the $26.63 consensus target. Shares closed Wednesday at $24.74.

U.S. Steel

This venerable steel producer remains a favorite across Wall Street. United States Steel Corp. (NYSE: X) produces and sells flat-rolled and tubular steel products in North America and Europe. It operates through three segments. Its Flat-Rolled Products segment offers slabs, rounds, strip mill plates, sheets and tin mill products. This segment serves customers in the automotive, consumer and the combined industrial, service center and mining commercial markets.

The Tubular Products segment offers seamless and electric resistance welded steel casing and tubing, as well as standard and line pipe and mechanical tubing products primarily to customers in the oil, gas and petrochemical markets. The company also provides railroad services and owns, develops and manages various real estate assets.

And its U.S. Steel Europe segment provides slabs, sheets, strip mill plates, tin mill products and spiral welded pipes, as well as heating radiators and refractory ceramic materials. This segment serves customers in the construction, service center, conversion, container, transportation, appliance and electrical, oil, gas and petrochemical markets.

Shareholders receive a 0.52% dividend. The Jefferies price target is $45. The consensus target is $43.46, and shares closed at $38.69.

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The weak dollar has been very helpful to the industry for much of 2017 and is expected to continue providing a lift this year, and while the dollar won’t stay weak forever, you can bet that the administration would like to see it stay weak for the time being. With pricing firm, and export potential and demand at home still strong, these stocks make sense for growth investors.

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