ArcelorMittal comes in at number three in this week’s countdown of the best European stocks for 2015. ArcelorMittal is the world’s largest steel producer with nearly 10% global market share. What stands out is just how undervalued this stock is, trading at less than half of its tangible book value. Any time you see that, it’s worth at the very least taking a closer look. While cyclicality, raw material costs, and competition pose risks, the firm’s scale advantage, vertical integration, and excellent management are mitigating factors. Its CEO – who founded the company in 1976 – has proven himself one of the most capable executive officers in the industry and controls 40% of the company, directly aligning his incentives with those of shareholders. The company is ahead of schedule on its major cost cutting initiatives, and has achieved over $1.5 billion in annual savings so far, with another $1.5 billion to be delivered by the end of next year. This positions the company for powerful margin expansion as core steel markets recover. ArcelorMittal is a beleaguered European stock that is poised for a major bounce in 2015.
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