Ahead of the Bell: Steel Dymanics, CMC upgraded

Citi Investment Research analysts upgraded the companies to "Buy" from "Hold."

Since June 19, shares of Steel Dynamics are down 18 percent and shares of Commercial Metals are down 16 percent. The dips give investors an opportunity, the investment bank said.

"We continue to view the U.S. steel market as supply driven, with even higher international prices limiting imports while domestic producers are already operating near capacity," Citi said in a note to clients.

Citi boosted its 2008 earnings estimate for Steel Dynamics to $3.47 per share from $3.33 per share, and raised its price target to $42 from $41.

Commercial Metals' "vertically integrated business model" allows it to glean profits from all production steps, including production, fabrication and distribution, said Citi, which has a $40 price target on the company.

Representatives from neither company were immediately available for comment.