Commercial Metals Company has been on a serious tear over the last 12 months.
Not a fan of all the recent AI plays in the market? Can we interest you in some cold, hard steel?
Last week ChatGPT suggested the most obvious AI stock in the world with Nvidia but this week the chatbot decided to go a very different direction with steel producer Commercial Metals Company (NYSE: CMC).
CMC is one of the biggest metal producers in the world and a backbone of US infrastructure. You’ll find CMC rebar in buildings, bridges and roads across America. But the big question is: where does it fit in the AI Insights portfolio?
If this is your first time here, the AI Insights ongoing feature involves asking ChatGPT for a single stock recommendation every week. We add $100 of that stock to our portfolio and compare it to a control portfolio (composed entirely of a total stock index fund). Rinse and repeat.
Let’s talk steel:
ChatGPT Stock Pick of the Week: Commercial Metals Company (CMC)
For the second straight week, ChatGPT was rather brief when responding to our weekly request for a stock pick:
A reasonable single-stock pick today, aligned with a value tilt and medium risk, is Commercial Metals Company (CMC).
When prompted, the chatbot provided a little more context. It said that CMC provided exposure to the real-world economy while diversifying from tech and AI. Fair enough.
Commercial Metals Company (CMC) at a Glance
| Company | Commercial Metals Company (CMC) |
| Ticker (Exchange) | CMC (NYSE) |
| Founded | 1915 |
| Headquarters | Irving, Texas, USA |
| CEO | Peter R. Matt |
| Core business | Manufacture, recycling, and fabrication of steel and metal products, including rebar and other long steel products via North America and Europe segments |
| Market cap | $7.1 billion |
| Employees | 13,022 (2023) |
| Price-to-earnings ratio (P/E) | 86 |
Our Take
CMC is a far cry from the Apples and Googles of the world, so we asked senior news writer Dave Kovaleski his thoughts on the stock:
Commercial Metals is not a stock that has come up on our collective radar here at ValueWalk too often over the years. What we know about it is that it is a global steel and metal producer that recycles and manufactures steel and metal for mainly construction and industrial uses.
The stock price is up 26% year-to-date and CMC has been a great long-term performer, averaging annualized returns of 25% and 15% over the past 5- and 10-year periods, respectively. It has a median price target of $65.50 per share, which suggests 3% growth.
Investors should know that while the Trump administration placed 50% tariffs on steel imports, Commercial Metals makes most of its steel and metals domestically. But investors should definitely do their due diligence before investing because there is a lot to know about the impact of tariffs, the steel industry, global trade, and the expectations for the construction industry right now.
But one thing that jumps out is that while the stock has a sky-high P/E ratio of 84, it has a forward P/E of just 10. That suggests that its earnings power is expected to increase in relation to the expected movement of its stock price.
What Other Experts Are Saying About Commercial Metals Company
CMC is seen quite favorably in the investing community with buy positions from analysts at Bank of America, Morgan Stanley and several other financial institutions.
TipRanks lists a 12-month average target price of $67.89, which would represent a roughly 6.28% price increase from where CMC trades today.
CitiGroup recently raised its rating of CMC from neutral to buy, citing a number of factors, including its most recent acquisition of precast concrete manufacturer Foley Products for $1.84 billion.
On the other hand, an analyst at Seeking Alpha was considerably less kind to the stock and felt that in these conditions (fairly strong demand for construction), CMC has been unable to execute at the highest standard.
How Did Last Week’s Pick Perform?
Nvidia has been on a bit of a rollercoaster lately. Chart from TradingView.com.
It’s been an interesting start for chip-making behemoth Nvidia in the AI Insights portfolio.
The day we added our $100 allotment of Nvidia stock, the company reported its Q3 earnings and by all accounts, it was a great one. Earnings were up and demand for its new Blackwell chip is reportedly “Off the charts,” according to CEO Jensen Huang.
Investors didn’t seem to buy the news, however, and the stock promptly took a significant dip. It has since recovered most of the drop, but it hasn’t been a particularly auspicious start for Nvidia in the portfolio.
The portfolio is in an interesting shape overall. Fellow AI chip maker Micron Technology has been a huge winner, as has healthcare company Progyny. Every other stock recommendation is currently in the gutter with NetApp and Comcast looking particularly bad.
Here’s an updated look at where the AI Insights portfolio stands after six weeks:
AI Insights Portfolio Week #7
- Total invested: $600
- Current Market Value: $612.95
- Total Unrealized Gains: 2.1%
| Stock | Shares | Day Gain | Total Gains | Market Value |
| Nvidia (NVDA) | 0.536 | 1.37% | -3.36% | 96.62 |
| Progyny (PGNY | 4.15 | -1.74% | +10.93% | $110.81 |
| Seagate (STX) | 0.363 | +3.97% | -1.27% | $98.84 |
| Comcast (CMCSA) | 3.5 | -0.41% | -6.87% | $92.99 |
| NetApp (NTAP) | 0.86 | -2.00% | -6.43 | $93.96 |
| Micron Technology (MU) | .52 | +2.55% | +19.96% | $119.74 |
So overall, the AI Insights portfolio is rocking a slight increase in value through a fairly rocky week in the stock market. Now let’s see how our control portfolio, which is made entirely of the Vanguard Total Stock Market Index Fund with purchases made over the same period.
Standard Portfolio (100% VTI) Week #7
- Total invested: $600
- Current Market Value: $606.01
- Gains: +1.03%
| Stock | Shares | Day Gain | Total Gains | Market Value |
| Vanguard Total Stock Index (VTI) | 1.207 | 0.69% | +1.03% | $606.01 |
It was a solid week for our VTI portfolio as it reversed its turn into the negative from last week and is once again in the black (albeit just barely).
At this point the AI Insights portfolio has outperformed the VTI portfolio by a whole percentage point but probably carries more long-term risk.
Methodology
Every week, we ask ChatGPT for a simple stock recommendation after the market closes on Wednesday.
We created some parameters for the recommendation, which you can read more about at the bottom of the first AI Insights article.
It’s a very basic experiment, and anyone could follow the same procedure using ChatGPT and a basic portfolio tracker.
Disclaimer: Neither the large language models or ValueWalk suggest actually using this as an investment strategy. This article is for educational purposes only.
