The modern steel industry got its start back in the 1850s and took off after the American Civil War, just as the U.S. and global economies took off. Many great fortunes were made in the steel boom.

#-ad_banner-#What’s more is that to this day there is no effective alternative for steel. The biggest fortune created from steel was that of Andrew Carnegie, who famously gave away all his money to charities after his death.

Today, the modern Andrew Carnegie is Lakshmi Mittal, an Indian steel magnate. Through a series of acquisitions, he built his family’s steel business into the world’s largest steel company: ArcelorMittal (NYSE: MT).

This company is now the best play on the global economy, since steel is used in so many industries and products, from automobiles in Detroit to skyscrapers in China. 

Steel demand is everywhere — and so is ArcelorMittal.

Mittal and his family are ArcelorMittal’s largest shareholders, with a 38% stake in the company. The fact that the family has a vested interest in the strength of the company ought to provide a margin of comfort to investors. Over the past few years, ArcelorMittal has been focused on reducing costs and becoming a more cost-efficient operator.

ArcelorMittal has been aggressive over the last few years when it comes to cost cutting and reducing overcapacity. Thanks to a rebounding economy and aligning of costs, ArcelorMittal’s earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to jump to $8 billion this year, up from $6.9 billion in 2013.

As a global player in steel, ArcelorMittal is poised to benefit from strong demand in North America, Europe and Asia. The company is vertically integrated: It owns mines that produce iron ore and coal, which are required for the production of steel. Its mining business gives it advantages over other steel makers when it comes to cost savings and revenue-generating opportunities.

Based in Luxembourg, ArcelorMittal is also expanding in various countries. In Canada, it is increasing capacity to capture a larger part of the auto steel market. It also recently acquired a plant in Alabama for $1.6 billion, which will boost ArcelorMittal’s supply capabilities to the energy and auto industry in the Southeast. The company is also boosting capacity in Brazil, which accounts for 20% of its revenue, in an effort to gain more exposure to the country’s growing demand for steel used in infrastructure. 

One concern after its acquisition spree is ArcelorMittal’s relatively high level. However, the company has been paying down that debt: At the end of last year, its debt was down to $16.1 billion, its lowest level since 2006. Debt at the end of this year is expected to be $15 billion. 

ArcelorMittal trades at an enterprise value-to-EBITDA ratio of 6.3. Compare that with U.S. Steel (NYSE: X) and Steel Dynamics (Nasdaq: STLD), which trade at 7.3 and 9.5, respectively. Shares of ArcelorMittal also pay a 1.1% dividend yield. 

As well, shares of ArcelorMittal are incredibly cheap when evaluated by other multiples. It trades at a forward price-to-earnings (P/E) ratio of only 10 times expected earnings, a price-to-sales multiple of 0.3 and price-to-book ratio of just 0.5. Shares also have a P/E-to-growth (PEG) ratio of only 0.5. 

ArcelorMittal’s stock is well below the high of almost $90 a share just before the financial crisis hit in 2008. With the help of a rebounding global economy, a stronger balance sheet and cost cuts, ArcelorMittal could be well on its way back toward those levels. 

Risks to Consider: ArcelorMittal has significant exposure to emerging markets, which are often more volatile than developed markets. As the largest steel company, ArcelorMittal also relies heavily on the broader economy. Any delay in an economic recovery could have a negative impact on the company’s revenue growth. 

Action to Take –> MT is trading well below its major peers. A valuation more in line with its peers would give it a price target of $30, which represents 100% upside from current levels. This might take a couple of years, but will put shares trading back to 2011 levels.

ArcelorMittal’s 1.1% dividend yield is unlikely to satisfy many income-starved investors — but did you know that 79% of the world’s highest-yielding stocks are actually overseas? In fact, we’ve found 93 stocks that yield 12% or more, including some of the safest, highest-yielding stocks the world has to offer. To learn more about these stocks, follow this link.