Analyst Explains Why He’s Buying More Cleveland-Cliffs (CLF)- ‘Leave Rare Earths Aside’

Core Viewpoint - Cleveland-Cliffs Inc (NYSE:CLF) is experiencing significant discussion among investors, particularly due to its recent quarterly results and subsequent stock performance influenced by Wells Fargo's downgrade, which suggested an overreaction to rare earths enthusiasm [1]. Group 1: Investment Thesis - Jim Lebenthal, Chief Equity Strategist at Cerity Partners, is bullish on Cleveland-Cliffs Inc, emphasizing that the investment thesis is evolving beyond rare earths [2]. - The company has secured contracts with major OEMs at favorable prices for the next two to three years, indicating a positive outlook driven by increasing auto demand, which constitutes about one-third of its business [2]. - A memorandum of understanding has been signed with an international steel company to utilize idle assets and plants at Cleveland-Cliffs, further enhancing the investment narrative [2]. Group 2: Market Context - The stock initially surged following the quarterly results but faced a decline after Wells Fargo's downgrade, highlighting the volatility in market sentiment surrounding the company [1]. - The overall market context includes a rising auto production trend, which is expected to benefit Cleveland-Cliffs significantly due to its involvement in the automotive supply chain [2].