The stock market has gotten stuck in a rut over the past couple of weeks, having fallen back slightly after a huge run higher throughout much of 2023. Even as the economy has held up well, concerns about persistent inflation and the future direction of interest rates have continued to weigh on investor sentiment.
Yet stock index futures pointed to a strong likelihood of at least a modest bounce higher Monday morning. In particular, a couple of stocks are drawing favorable attention from shareholders. Read on to learn more about what's happening with U.S. Steel (NYSE: X) and Monday.com (NASDAQ: MNDY), and you'll find out whether they have prospects to lead the market higher in the days and weeks to come.
U.S. Steel looks for alternatives to a takeover
Shares of U.S. Steel jumped 27% in premarket trading Monday morning. The iconic steelmaker had a busy weekend, having received an acquisition offer but deciding to seek its own path forward.
On Sunday, U.S. Steel announced that it would start a formal review process designed to evaluate strategic alternatives for the steelmaker. The move came after U.S. Steel received "multiple unsolicited proposals," which it took as a validation of its turnaround efforts and its greatly improved business execution.
Shortly thereafter, one of those unsolicited proposals went public, as Cleveland-Cliffs confirmed that it had offered $7.3 billion to buy out U.S. Steel. The deal's terms would give U.S. Steel shareholders $17.50 in cash and 1.023 shares of Cleveland-Cliffs stock for each U.S. Steel share, implying a total value of $35 per share. However, Cleveland-Cliffs also said that U.S. Steel had rejected its bid as of Sunday, saying that its acquisition target's board of directors had seen the offer as "unreasonable."
U.S. Steel stock hasn't made much headway in decades, but shareholders now seem more optimistic that a turnaround could be in place. It's encouraging to see interest in the steelmaker's stock, but now U.S. Steel has to make a smart decision in how to proceed from here.
Happy Monday for Monday.com
Elsewhere, shares of Monday.com were up almost 6% in premarket trading. The workplace management software specialist reported second-quarter financial results that gave investors confidence in its long-term growth.
Monday's results looked solid. Revenue of $176 million was up 42% year over year, and Monday reversed a year-earlier loss with adjusted earnings of $0.41 per share. Free cash flow also went positive, with the business generating nearly $46 million after seeing outflows of more than $19 million in the prior-year period.
Monday.com's business metrics also held up well. Net dollar retention rates remained above 110%, and surpassed 120% for customers with more than 10 users. The number of customers spending at least $50,000 annually on Monday's software jumped 63% to 1,892, and those customers also showed encouragingly high net dollar retention rates.
The company pointed to the launch of several artificial intelligence (AI)-related features, which made investors more enthusiastic about its prospects. The Monday AI Assistant includes many new artificial intelligence capabilities, including automated task generation, formula building, email composition, and content generation. Meanwhile, Monday's AI solution builder lets customers use an OpenAI-powered chatbot to build personalized boards for workplace management.
Monday's guidance also looked favorable, with the company predicting full-year 2023 revenue will climb 37% to 38% to a range of $713 million to $717 million. For those who feared that software-as-a-service stocks had seen growth run its course, Monday showed that AI could be a lasting positive influence for a long time to come.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Monday.com. The Motley Fool has a disclosure policy.
