3. Warrior Met Coal Inc. (NYSE:HCC)
Number of Hedge Fund Holders: 31
Warrior Met Coal Inc. (NYSE:HCC) ranks next on our list of the most exciting coal stocks to buy. The Alabama-based company mines, produces and sells non-thermal metallurgical coal to the steelmaking industry around the globe, including South America, Europe and Asia. It also markets natural gas, which is extracted as a byproduct of coal production. Warrior Met Coal Inc. (NYSE:HCC) has also enjoyed an impressive rally like other major coal stocks, having soared 116.40% in the last 12 months, and 58.80% so far in 2022 as of June 8.
Out of all the hedge funds tracked by Insider Monkey, 31 reported ownership of positions in Warrior Met Coal Inc. (NYSE:HCC) with an aggregate value of $353.9 million. The same number of hedge funds were stakeholders in the coal firm a quarter ago as well.
For Q1 2022, Warrior Met Coal Inc.’s (NYSE:HCC) revenue stood at $378.65 million, up 77.14% from year-ago figures but missing estimates by $34 million. EPS also came in below estimates by $0.79.
On June 7, Jefferies analyst Christopher LaFemina upgraded Warrior Met Coal Inc. (NYSE:HCC) to ‘Buy’ from ‘Hold’, with a revised price target of $50, up from $36. While the larger macro setup is risky and mining shares “should be volatile,” the analyst sees the sector as undervalued and well-positioned to outperform as demand in China amps up again.
Despite the recent outperformance, investment firm Horos Asset Management had this to say about Warrior Met Coal Inc. (NYSE:HCC) in its Q3 2021 investor letter:
“In addition, we trimmed our stake in the U.S. company Warrior Met Coal (“Warrior”), following its excellent recent performance. The metallurgical coal producer, which is necessary to produce steel in blast furnaces, benefited during the quarter from the sharp rise in the price of this commodity. Specifically, the price of Warrior’s metallurgical coal, referenced to Australia’s Premium Low-Vol FOB Hard Coking Coal, rose by 100% in the quarter and is up 300% from the lows of the beginning of the year, when it was trading at around 100 dollars per tonne. The reason for the huge price increase can be found in the bottleneck that this industry is experiencing, due to a few factors. On the one hand, the recovery of economic activity after the worst of the pandemic ended and the extra boost given by the huge fiscal and monetary stimuli from governments globally and, on the other hand, the lack of investment in new supply in recent years due to the hangover from previous overcapacity, the poor situation of some players in the industry and, especially, the political and social agenda against climate change.
This rise in the price of metallurgical coal has seen Warrior’s share price appreciate by more than 70% from last summer’s lows, contributing significantly to our fund’s performance. However, the downside of the story is that Warrior has had the bulk of its employees on strike since April, which means that the company is not producing at one of its two mines and the other is not at 100% capacity, so it is not benefiting from the current positive dynamics like other players in the industry.”
