11 Best Coal Mining Stocks To Buy Today

Published on March 18, 2023 at 6:33 pm by Hamna Asim in Hedge Funds, News

In this article, we discuss 11 best coal mining stocks to buy today. If you want to see more stocks in this selection, check out 5 Best Coal Mining Stocks To Buy Today.

Coal occupies a central position in discussions related to climate change and energy because it is the most significant source of energy worldwide for producing electricity, iron, and steel, and cement. Additionally, it is the largest emitter of carbon dioxide among all energy sources. Despite the existence of climate and energy targets, the ongoing energy crisis has compelled several nations to boost their dependence on coal.

On March 14, Fitch Ratings slashed its 2023 price assumption for Australian thermal coal. The recent revision in their metallurgical coal price projections is based on a combination of factors. Firstly, there is a boost in demand as China has lifted its ban on imports from Australia. Secondly, production costs in the sector have increased by approximately 25% in 2022 due to inflation in fuel, energy, and labor costs, along with the new royalty regime in Queensland. Lastly, there is significant supply volatility from Australia which also affects the price projections.

The Chinese government’s data released on March 15 showed that coal production in China increased by 5.8% during the first two months of 2023 compared to the same period in the previous year. This was due to the addition of new mining capacity and the government’s encouragement of miners to increase production to improve energy security. China is the largest coal miner and consumer in the world, with a production of 734.23 million tonnes during the January-February period, compared to 686.6 million tonnes in the same period in 2022, according to the National Bureau of Statistics. China’s focus on energy security has been amplified due to the disruption of energy supply chains and a significant rise in global coal prices triggered by Russia’s invasion of Ukraine.

Some of the best coal stocks to buy include Teck Resources Limited (NYSE:TECK), CONSOL Energy Inc. (NYSE:CEIX), and BHP Group Limited (NYSE:BHP).

Photo by Stephen Philpott on Unsplash

Our Methodology

For this article, we selected coal stocks based on overall hedge fund sentiment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the fourth quarter of 2022. The list is arranged in ascending order of the number of hedge fund holders in each firm.

Best Coal Mining Stocks To Buy Today

11. Alliance Resource Partners, L.P. (NASDAQ:ARLP)

Number of Hedge Fund Holders: 6

Alliance Resource Partners, L.P. (NASDAQ:ARLP) is involved in the production and distribution of various natural resources, primarily coal, to industrial and utility customers in the United States. Alliance Resource Partners, L.P. (NASDAQ:ARLP) operates through four segments – Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties, and Coal Royalties. They offer a variety of thermal and metallurgical coal with varying sulfur and heat contents. The company was established in 1971 and has its headquarters in Tulsa, Oklahoma.

On January 30, Alliance Resource Partners, L.P. (NASDAQ:ARLP) reported a Q4 GAAP EPS of $1.63 and a revenue of $700.7 million, outperforming Wall Street estimates by $0.22 and $12.43 million, respectively. Revenue for the period increased 48% on a year-over-year basis.

According to Insider Monkey’s fourth quarter database, 6 hedge funds were bullish on Alliance Resource Partners, L.P. (NASDAQ:ARLP), with collective stakes worth $82.5 million. Adam Peterson’s Magnolia Capital Fund is the biggest stakeholder of the company, with 2.7 million shares worth $54.7 million.

Like Teck Resources Limited (NYSE:TECK), CONSOL Energy Inc. (NYSE:CEIX), and BHP Group Limited (NYSE:BHP), Alliance Resource Partners, L.P. (NASDAQ:ARLP) is one of the best coal mining stocks to watch.

Miller Value Partners made the following comment about Alliance Resource Partners, L.P. (NASDAQ:ARLP) in its Q3 2022 investor letter:

“Alliance Resource Partners, L.P. (NASDAQ:ARLP) was the top contributor for the quarter, rising 28.0%2. Alliance reported 2Q22 revenue of $616.5MM, +70.1% year over year (Y/Y) and +33.8% sequentially, ahead of consensus of $542.4MM, and earnings per unit (EPU) of $1.23, +261.8% Y/Y, ahead of analyst expectations for EPU of $0.95. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the quarter came in at $266.3MM, or a margin of 43.2%, +565bps Y/Y, as the company sold 8.93MM tons (+13.9% Y/Y) of coal at an average price of $59.33/ton (+43.3% Y/Y). Management provided full-year 2022 (FY22) guidance for coal sales of 35.5-37.0MM tons, at an average price of $59-63/ton, and raised guidance for capex to now come in at $230-250MM, compared to previous guidance for capex of $220-240MM. The company also raised its quarterly distribution by 14.3% to $0.40/unit, implying an annualized yield of 7.1%.”

10. Ramaco Resources, Inc. (NASDAQ:METC)

Number of Hedge Fund Holders: 12

Ramaco Resources, Inc. (NASDAQ:METC) engages in the sale, development, and operation of metallurgical coal. The company primarily serves blast furnace steel mills and coke plants in the US, as well as international customers who consume metallurgical coal. Ramaco Resources, Inc. (NASDAQ:METC) was established in 2015 and is headquartered in Lexington, Kentucky. It is one of the best coal stocks to invest in.

BMO Capital analyst Katja Jancic on March 14 took over coverage of Ramaco Resources, Inc. (NASDAQ:METC) with a Market Perform rating and an unchanged price target of $11.

According to Insider Monkey’s fourth quarter database, 12 hedge funds were bullish on Ramaco Resources, Inc. (NASDAQ:METC), compared to 16 funds in the prior quarter. Todd J. Kantor’s Encompass Capital Advisors is the largest stakeholder of the company, with 611,732 shares worth $5.3 million.

Here is what Horos Asset Management specifically said about Ramaco Resources, Inc. (NASDAQ:METC) in its second quarter 2022 investor letter:

“Finally, this quarter we reinvested (for the third time in about a year) in the metallurgical coal producer Ramaco Resources. The share price decline, due to fears of a major economic recession, created a new window of opportunity to invest in one of the companies in the sector with the best prospects for the coming years and, moreover, one of the few with a management team fully aligned with the interests of its shareholders (the company’s management and board own close to 50% of the shares).”

9. Hallador Energy Company (NASDAQ:HNRG)

Number of Hedge Fund Holders: 13

Hallador Energy Company (NASDAQ:HNRG) is a company that produces steam coal for the electric power generation industry in the state of Indiana. The company operates two underground mines, Oaktown Mine 1 and Oaktown Mine 2. In addition to its coal mining operations, the company also engages in gas exploration activities in Indiana. Hallador Energy Company (NASDAQ:HNRG) was established in 1949 and is headquartered in Terre Haute, Indiana. On March 17, the company reported FY 2022 adjusted EBITDA of $56.23 million and a revenue of $361.99 million, up 46.2% year-over-year and beating market estimates by $29.09 million. It is one of the best coal stocks to monitor.

On January 17, B. Riley analyst Lucas Pipes downgraded Hallador Energy Company (NASDAQ:HNRG) to Neutral from Buy with an unchanged price target of $9.

According to Insider Monkey’s fourth quarter database, 13 hedge funds held stakes worth $25 million in Hallador Energy Company (NASDAQ:HNRG), compared to 8 funds in the prior quarter worth $17.7 million. Aaron Weitman’s CastleKnight Management is the biggest position holder in the company, with 600,999 shares worth $6 million.

Cove Street Capital made the following comment about Hallador Energy Company (NASDAQ:HNRG) in its Q4 2022 investor letter:

“On the positive end of the spectrum, Hallador Energy Company (NASDAQ:HNRG) continues to be one of our biggest winners, as people belatedly realize just how long the tail is for coal usage in the world, despite any wishes or well-meaning attempts to have it go away. HNRG has enormous operating leverage that we think is going to be “higher and longer” and retain our position after a modest trim in position size after a 4x increase from our initial purchase price.”

8. SunCoke Energy, Inc. (NYSE:SXC)

Number of Hedge Fund Holders: 17

SunCoke Energy, Inc. (NYSE:SXC) operates as a standalone coke producer in the Americas and Brazil. The company is divided into three segments – Domestic Coke, Brazil Coke, and Logistics, and offers both metallurgical and thermal coal. It provides handling and mixing services to a variety of customers, including those in the steel, coke, electric utility, coal producing, and other manufacturing industries. The company was established in 1960 and is headquartered in Lisle, Illinois. It is one of the top coal stocks to invest in. In 2023, SunCoke Energy, Inc. (NYSE:SXC) expects domestic total production of coke to be approximately 4.0 million tons.

On February 6, Lucas Pipes, an analyst at B. Riley, increased the price target on SunCoke Energy, Inc. (NYSE:SXC) from $11 to $12 and maintained a Buy rating on the stock, following the company’s strong Q4 results. The analyst noted that SunCoke Energy, Inc. (NYSE:SXC)’s solid guidance and impressive results make the stock’s valuation appealing.

According to Insider Monkey’s fourth quarter database, 17 hedge funds were long SunCoke Energy, Inc. (NYSE:SXC), with combined stakes worth $59 million. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of the company, with 801,325 shares worth nearly $7 million.

Here is what Steel City Capital has to say about SunCoke Energy, Inc. (NYSE:SXC) in its Q4 2021 investor letter:

“Suncoke owns five cokemaking facilities in the U.S. capable of producing 4.2 million tons per annum (mtpa) of blast furnace coke. Coke is a key raw material used in the process of producing steel via the blast furnace method. In addition to its cokemaking operations, SXC owns a collection of marine terminals, the largest of which is the Convent Marine Terminal (CMT) in Louisiana. CMT has the capacity to transload 15 mtpa of coal and other industrial materials. In 2020, CMT accounted for 55% of U.S. thermal coal exports from the U.S. Gulf Coast and 15% of total U.S. thermal coal exports.

While the broader steelmaking industry recently benefited from all-time high steel prices, resulting in record production levels, growing cash flow, and improving balance sheets, SXC has continued to trade with a free cash flow yield in excess of 20%, reflecting considerable concern about the company’s prospects. I believe there is a broad misunderstanding of the SXC story driven in part by shallow analysis of the company’s business model and cash flow prospects. I believe fair market value ranges from $14-$17, representing an upside of 84-122% from current levels. What’s more, SXC represents an attractive takeout target for industry-consolidator Cleveland Cliffs (CLF), which at a minimum provides downside protection, but also offers a potential catalyst for value realization in the future. ” (Click here to see the full text)

7. Warrior Met Coal, Inc. (NYSE:HCC)

Number of Hedge Fund Holders: 25

Warrior Met Coal, Inc. (NYSE:HCC) is a company that specializes in the production and exportation of non-thermal metallurgical coal, which is primarily used in the steel industry. The company operates two underground mines in Alabama and sells its coal to blast furnace steel producers located mainly in Europe, South America, and Asia. Warrior Met Coal, Inc. (NYSE:HCC) is one of the premier coal stocks to monitor. On March 7, the company paid a special dividend of $0.88 per share to unit holders.

BMO Capital initiated coverage of Warrior Met Coal, Inc. (NYSE:HCC) on March 14 with a Market Perform and a price target of $39.

According to Insider Monkey’s fourth quarter database, 25 hedge funds were bullish on Warrior Met Coal, Inc. (NYSE:HCC), compared to 24 funds in the prior quarter. Martin Whitman’s Third Avenue Management is the largest stakeholder of the company, with 1.2 million shares worth $44 million.

Here is what Horos Asset Management has to say about Warrior Met Coal, Inc. (NYSE:HCC) in its Q1 2022 investor letter:

“Among others, we can highlight that at Horos Value Internacional we exited our position in the metallurgical coal producer Warrior Met Coal, following the strong performance of its stock. Meanwhile, although with somewhat different dynamics, our investment in the metallurgical coal company Warrior Met Coal also had strong returns and we sold it during the period. The reason is purely due to its lower upside potential after a very strong performance.”

6. Alpha Metallurgical Resources, Inc. (NYSE:AMR)

Number of Hedge Fund Holders: 26

Alpha Metallurgical Resources, Inc. (NYSE:AMR) is a mining company that produces, processes, and markets met and thermal coal primarily in Virginia and West Virginia. Alpha Metallurgical Resources, Inc. (NYSE:AMR) was founded in 2016 and is headquartered in Bristol, Tennessee. On March 13, the company declared a $0.44 per share quarterly dividend, a 5.3% increase from its prior dividend of $0.42. The dividend is payable on April 3, to shareholders of record on March 15.

On February 27, Lance Vitanza, an analyst at Cowen, increased the price target on Alpha Metallurgical Resources, Inc. (NYSE:AMR) from $200 to $210 and maintained an Outperform rating on the shares. The analyst noted that the company has addressed the issues that limited its production levels in the fourth quarter by incorporating strategies to enhance its logistics control.

According to Insider Monkey’s fourth quarter database, 26 hedge funds were bullish on Alpha Metallurgical Resources, Inc. (NYSE:AMR), compared to 27 funds in the prior quarter. Jeffrey Gendell’s Tontine Asset Management is the largest stakeholder of the company, with 737,506 shares worth $108 million.

Like Teck Resources Limited (NYSE:TECK), CONSOL Energy Inc. (NYSE:CEIX), and BHP Group Limited (NYSE:BHP), Alpha Metallurgical Resources, Inc. (NYSE:AMR) is one of the top coal stocks to invest in.

Click to continue reading and see 5 Best Coal Mining Stocks To Buy Today.

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