10 Cheap Coal Stocks to Buy Now

Published on August 18, 2022 at 11:26 am by Usman Kabir in Hedge Funds, News

In this article, we discuss 10 cheap coal stocks to buy now.

Slowing economic growth and energy market turbulence have added to the uncertainty around coal stocks in recent months, hitting a market that was already in turmoil due to environmental concerns and pandemic shocks. One of the main reasons for this uncertainty was demand issues from China. The economy of the country is now recovering from the lockdowns that brought manufacturing to a standstill. Coal consumption around the world is also expected to rise in 2022 due to soaring energy prices as countries look for alternatives to fossil fuels.

According to a report by the International Energy Agency, global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tons. This is the highest consumption of the resource since 2013. The agency expects next year to be even better for coal firms with regards to consumption. Rising gas prices, which have benefited energy giants like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP), are another reason for the bullish near-term outlook for coal.

The soaring prices have forced many countries to switch to coal, including manufacturing hubs in China and India. This has led to a coal shortage, giving a boost to coal stocks. Coal consumption in India and the European Union is expected to rise by 7% in 2022. A ban on Russian coal imports in Europe will benefit American coal miners. For investors who want to ride this boom for the coal sector, but do not want to opt for expensive options, there are many coal stocks trading at relatively cheap prices which offer the same bang for the buck.

Our Methodology

The companies that operate in the coal sector and were trading at below $50 per share, as of August 17, were selected for the list. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.

Cheap Coal Stocks to Buy Now

10. NACCO Industries, Inc. (NYSE:NC)

Number of Hedge Fund Holders: 5

Share Price as of August 17: $44.49

NACCO Industries, Inc. (NYSE:NC) engages in the natural resources business. The company has an impressive dividend history stretching back more than thirty-five years. In the past eight years, the payouts have registered consistent growth. In mid-May, the company declared a quarterly dividend of $0.2075 per share, an increase of more than 5% from the previous dividend of $0.1975 per share. The forward yield was 1.57%. The firm operates surface coal mines under long-term contracts for power generation companies.

NACCO Industries, Inc. (NYSE:NC) posted earnings for the second quarter of 2022 on August 3, reporting earnings per share of $5.07 and a revenue of more than $37 million. The stock has climbed over 60% in the past year amid rising coal prices.

At the end of the first quarter of 2022, 5 hedge funds in the database of Insider Monkey held stakes worth $16 million in NACCO Industries, Inc. (NYSE:NC), the same as in the preceding quarter worth $18 million.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in NACCO Industries, Inc. (NYSE:NC), with 263,415 shares worth more than $10 million.

Just like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP), NACCO Industries, Inc. (NYSE:NC) is one of the stocks benefiting from soaring energy prices.

9. Natural Resource Partners L.P. (NYSE:NRP)

Number of Hedge Fund Holders: 2

Share Price as of August 17: $42.75

Natural Resource Partners L.P. (NYSE:NRP) owns and manages a portfolio of mineral properties. The stock has gained in the past few months as Western countries, especially the United States and allies in Europe, impose tough sanctions on Russian imports due to the invasion of Ukraine. In early April, the European Union imposed a coal embargo on Russia, boosting the stocks of firms like Natural Resource as EU businesses looked towards miners in the US to fill the gap.

On August 4, Natural Resource Partners L.P. (NYSE:NRP) posted earnings for the second quarter of 2022, reporting earnings per share of $3.29 and a revenue of $99 million, up more than 159% compared to the revenue over the same period last year.

At the end of the first quarter of 2022, 2 hedge funds in the database of Insider Monkey held stakes worth $23 million in Natural Resource Partners L.P. (NYSE:NRP), the same as in the preceding quarter worth $18 million.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm GoldenTree Asset Management is a leading shareholder in Natural Resource Partners L.P. (NYSE:NRP), with 543,469 shares worth more than $23 million.

8. Teck Resources Limited (NYSE:TECK)

Number of Hedge Fund Holders: 56

Share Price as of August 17: $34.59

Teck Resources Limited (NYSE:TECK) is a diversified metals and mining firm. On July 27, the company posted earnings for the second quarter of 2022, reporting earnings per share of C$3.25, missing market estimates by C$0.05. The revenue over the period was C$5.7 billion, up more than 126% compared to the revenue over the same period last year and beating analyst expectations by C$190 million. The firm said that capital cost guidance had increased by U$1.4—$1.5 billion due to inflation impact on labor costs.

On August 16, investment advisory Stifel maintained a Buy rating on Teck Resources Limited (NYSE:TECK) stock and lowered the price target to C$59 from C$62. Analyst Alex Terentiew issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, New York-based firm Soroban Capital Partners is a leading shareholder in Teck Resources Limited (NYSE:TECK), with 12.2 million shares worth more than $495 million.

At the end of the first quarter of 2022, 56 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in Teck Resources Limited (NYSE:TECK), compared to 40 in the preceding quarter worth $1.6 billion.

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

Number of Hedge Fund Holders: 31

Share Price as of August 17: $33.84

Warrior Met Coal, Inc. (NYSE:HCC) produces and exports non-thermal metallurgical coal primarily for the steel industry. On August 3, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $5.87, beating analyst expectations by $0.63. The revenue over the period was over $625 million, up more than 174% compared to the revenue over the same period last year and beating market estimates by $50 million. The firm guided coal sales of 5.5-6.5 metric tons in 2022.

On July 7, B. Riley analyst Lucas Pipes maintained a Buy rating on Warrior Met Coal, Inc. (NYSE:HCC) stock and raised the price target to $48 from $45, backing coal prices to remain well above historical levels in the coming months.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Warrior Met Coal, Inc. (NYSE:HCC), with 2.1 million shares worth more than $78 million.

At the end of the first quarter of 2022, 31 hedge funds in the database of Insider Monkey held stakes worth $353 million in Warrior Met Coal, Inc. (NYSE:HCC), the same as in the previous quarter worth $212 million.

In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Warrior Met Coal, Inc. (NYSE:HCC) was one of them. Here is what the fund said:

“Among others, we can highlight that at Horos Value Internacional we exited our position in the metallurgical coal producer Warrior Met Coal, Inc. (NYSE:HCC), 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. Peabody Energy Corporation (NYSE:BTU)

Number of Hedge Fund Holders: 27

Share Price as of August 17: $23.47

Peabody Energy Corporation (NYSE:BTU) is a Missouri-based coal mining firm. It has interests in 17 coal mining operations. These are based in the United States and Australia primarily. The operations have 2.5 billion tons of proven and probable coal reserves and almost 450,000 acres of surface property. In late July, the firm posted earnings for the second quarter of 2022, reporting a revenue of more than $1.32 billion, up over 82% compared to the revenue over the same period last year.

On July 7, B. Riley analyst Lucas Pipes maintained a Buy rating on Peabody Energy Corporation (NYSE:BTU) stock and lowered the price target to $33 from $34, predicting that higher thermal prices will act as a backstop for met coal prices in the medium term.

At the end of the first quarter of 2022, 27 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Peabody Energy Corporation (NYSE:BTU), compared to 28 in the preceding quarter worth $421 million.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Elliott Management is a leading shareholder in Peabody Energy Corporation (NYSE:BTU), with 25 million shares worth more than $634 million.

In addition to Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP), Peabody Energy Corporation (NYSE:BTU) is one of the stocks that hedge funds are monitoring as energy prices rally.

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

Number of Hedge Fund Holders: 5

Share Price as of August 17: $23.10

Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a diversified natural resource company. In early August, Joseph W. Craft, the CEO of the firm, said that Alliance Resource Partners, L.P. (NASDAQ:ARLP) has been able to execute new coal sales commitments for delivery of 24.9 million tons through 2025 at prices above recent expectations. Craft noted that this was due to global superpowers scrambling to bolster low stockpiles in the near term and secure longer term reliable supply. The firm has already sold 8,933 tons of coal in the past 12 months, up from 7,846 tons in the previous 12-month period.

Alliance Resource Partners, L.P. (NASDAQ:ARLP) posted earnings for the second quarter of 2022 on August 1, reporting earnings per share of $1.23, beating market estimates by $0.29. The revenue over the period was $616 million, up 70% year-on-year.

At the end of the first quarter of 2022, 5 hedge funds in the database of Insider Monkey held stakes worth $94 million in Alliance Resource Partners, L.P. (NASDAQ:ARLP), the same as in the previous quarter worth $79 million.

Among the hedge funds being tracked by Insider Monkey, Delaware-based investment firm Magnolia Capital Fund is a leading shareholder in Alliance Resource Partners, L.P. (NASDAQ:ARLP), with 4.9 million shares worth more than $76 million.

In its Q2 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Alliance Resource Partners, L.P. (NASDAQ:ARLP) was one of them. Here is what the fund said:

“Alliance Resource Partners, L.P. (NASDAQ:ARLP) rose 20.3% in the period. Alliance Resource Partners, L.P. (NASDAQ:ARLP) reported 1Q22 revenue of $460.9 million, +44.7% Y/Y, but down 2.7% from 4Q21, as a result of lower coal sales volume due to previously reported coal shipment delays. The company reported 1Q22 Adjusted EBITDA of $152.3 million, +61.5% Y/Y, and +16.9% from 4Q21, due to higher realized prices for coal and higher oil and gas royalties. The company also raised its 2Q22 cash distribution to $0.35 per unit, implying a 6.7% annualized based on the stock’s 7/13 closing price, and representing a 40% increase from the 1Q22 distribution of $0.25 per unit. Additionally, management now expects to deliver coal for $54-63 per ton in 2022, up 16.7% from January’s estimate of $49.05-51.25 per ton at the midpoint, and to sell as much as 37 million tons this year, compared to previous guidance for as much as 36.7 million tons.”

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

Number of Hedge Fund Holders: 22

Share Price as of August 17: $10.80

Ramaco Resources, Inc. (NASDAQ:METC) produces and sells metallurgical coal. On August 8, the company announced that it would be purchasing Maben Coal from Appleton Coal for $30 million. The former owns 33 million tons of mineable coal reserves on more than 28,000 leased acres in West Virginia. The firm expects to mine 1.5 million tons of coal contained in the Sewell seam as well as another 31 million tons of coal contained in the Pocahontas 3 and Pocahontas 4 seams in the near future.

On August 10, B. Riley analyst Lucas Pipes maintained a Buy rating on Ramaco Resources, Inc. (NASDAQ:METC) stock and lowered the price target to $24 from $31, identifying higher capital spending and cost assumptions as some of the reasons behind the target drop.

At the end of the first quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $38 million in Ramaco Resources, Inc. (NASDAQ:METC), compared to 14 in the previous quarter worth $13 million.

Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Ramaco Resources, Inc. (NASDAQ:METC), with 485,907 shares worth more than $7.6 million.

In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Ramaco Resources, Inc. (NASDAQ:METC) was one of them. Here is what the fund said:

“This quarter we sold our entire stakes in Ramaco Resources, Inc. (NASDAQ:METC). The reason is purely due to their lower upside potential after a very strong performance. In the case of Ramaco Resources, Inc. (NASDAQ:METC), as we mentioned in the previous quarterly letter, its high volatility allowed us to realize high returns on two different occasions (we exited the position and then re-entered it) in a short period of time, demonstrating the importance of rebalancing positions in our portfolio. Meanwhile, although with somewhat different dynamics, our investments in the metallurgical coal companies Ramaco Resources has strong returns and we sold them during the period.”

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

Number of Hedge Fund Holders: 15

Share Price as of August 17: $7.06

SunCoke Energy, Inc. (NYSE:SXC) operates as an independent producer of coke. The firm is trying to build a dividend profile in line with other coal miners. On August 2, the company declared a quarterly dividend of $0.08 per share, an increase of over 33% compared to the previous dividend of $0.06 per share. The forward yield was an attractive 4.38%. The dividend is payable to shareholders by early September. The firm was founded in 1960 and is based in Lisle, Illinois.

On August 2, SunCoke Energy, Inc. (NYSE:SXC) posted earnings for the second quarter of 2022, reporting earnings per share of $0.21, missing market estimates by $0.02. The revenue over the period was $501 million, up 37% year-on-year.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in SunCoke Energy, Inc. (NYSE:SXC), with 2.9 million shares worth more than $26 million.

At the end of the first quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $60 million in SunCoke Energy, Inc. (NYSE:SXC), compared to 16 in the preceding quarter worth $63 million.

In its Q4 2021 investor letter, Steel City Capital, an asset management firm, highlighted a few stocks and SunCoke Energy, Inc. (NYSE:SXC) was one of them. Here is what the fund said:

“SunCoke Energy, Inc. (NYSE:SXC) 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 benefitted 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 upside of 84-122% from current levels. What’s more, SunCoke Energy, Inc. (NYSE: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)

2. Hallador Energy Company (NASDAQ:HNRG)

Number of Hedge Fund Holders: 8

Share Price as of August 17: $6.47

Hallador Energy Company (NASDAQ:HNRG) engages in the production of steam coal. The company owns and runs the Oaktown Mine 1 and Oaktown Mine 2 underground mines. These are located in Indiana. It also operates Ace in the Hole, another mine in the same state. Apart from coal, the firm has been involved in gas exploration activities as well. The company was founded in 1949. In early July, the firm raised the 2023 EBITDA guidance to $160 million in light of new contracts.

Hallador Energy Company (NASDAQ:HNRG) posted earnings for the second quarter of 2022 on August 15, reporting a revenue of more than $65 million, up over 18% compared to the revenue over the same period last year.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm CastleKnight Management is a leading shareholder in Hallador Energy Company (NASDAQ:HNRG), with 935,625 shares worth more than $3.7 million.

At the end of the first quarter of 2022, 8 hedge funds in the database of Insider Monkey held stakes worth $8.3 million in Hallador Energy Company (NASDAQ:HNRG), compared to 9 in the previous quarter worth $5.8 million.

1. American Resources Corporation (NASDAQ:AREC)

Number of Hedge Fund Holders: 4

Share Price as of August 17: $2.58

American Resources Corporation (NASDAQ:AREC) engages in the metallurgical coal business. On August 11, the company announced that it would be starting the planning and development of two carbon mines in Kentucky. These mines will supply the McCoy Elkhorn complex of the firm with additional metallurgical carbon. The mines are capable of producing 45,000 tons of coal a month and have a low cost of development. The firm also recently received $4.9 million in federal tax credits for its Wyoming County Coal complex in West Virginia.

American Resources Corporation (NASDAQ:AREC) posted earnings for the second quarter of 2022 on August 15, reporting a revenue of more than $16 million, up over 312% compared to the revenue over the same period last year.

At the end of the first quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $2.1 million in American Resources Corporation (NASDAQ:AREC), compared to 2 in the previous quarter worth $461,000.

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10 Cheap Coal Stocks to Buy Now

Published on August 18, 2022 at 11:26 am by Usman Kabir in Hedge Funds, News