For investors with a stomach strong enough to digest the volatility of the steel market, JPMorgan has two stock recommendations that could see significant upside. The investment bank upgraded U.S. Steel and Nucor to buy, arguing that the steel market will stabilize in 2025 as interest rates fall and the November presidential election enters the rearview mirror. “Over the next several months we’d expect a period of volatility, but for those with a longer term view that can stomach risk, we see NUE and X as best positioned for upside into next year,” analyst Bill Peterson told clients in a Monday research note. Peterson raised his U.S. Steel price target by $2 to $42, implying 34% upside from Friday’s close. He bumped Nucor’s target by $4 to $174, pointing to a gain of 25%. X NUE YTD mountain X v. NUE in 2024 President Joe Biden is reportedly poised to block U.S. Steel’s pending sale to Japan’s Nippon Steel. The company’s shares are likely to pull back in a kneejerk reaction, Peterson said. “Hence, we see strong standalone valuation support despite our conservative price forecast, presenting an attractive buying opportunity for fundamental investors,” the analyst said. U.S. Steel’s free cash flow will also likely reach an inflection point in 2025 as capital expenditure requirements ease, supporting the resumption of share buybacks, Peterson said. Nucor valuation is below multi-year averages right now, which also presents an attractive buying opportunity, he said. And the company has the best product diversification in JPMorgan’s coverage, he said. “We find particular value in the latter, which can help protect earnings volatility through the cycle, given rate/election uncertainty through year-end and into 2025 weighing on underlying steel demand,” Peterson said.