We recently published a list of Jim Cramer Recently Shed Light on These 9 Stocks. In this article, we are going to take a look at where Alliance Resource Partners, L.P. (NASDAQ:ARLP) stands against other stocks that Jim Cramer recently highlighted.
Jim Cramer, host of Mad Money, recently discussed a possible looming energy crisis in the U.S. that has taken many by surprise. He warned that if the country doesn’t act swiftly, it will soon be overwhelmed by an energy shortfall. According to Cramer, we need to tap into every available energy source including natural gas, wind, geothermal, and hydroelectric power. However, he stressed that the most critical energy source right now is nuclear power. He added:
“Crisis comes down to the fact that we had no real industrial growth in this country for decades so we haven’t had to build much energy infrastructure. Now all of a sudden these data centers start coming online like the ones that will be part of Stargate, the Oracle, SoftBank, OpenAI project… And these data centers consume insane amounts of electricity. It’s a level of demand that nobody saw coming. So after years where we spent more time decommissioning power plants and building new ones, we suddenly gotta go back into growth mode.”
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Cramer went on to discuss an energy source that many are reluctant to consider: coal. While it may seem counterintuitive, he argued that coal could make a comeback in the U.S. energy mix.
“When the president gave his inaugural address on Monday, he declared a national emergency aiming to produce more domestic fossil fuels, including coal. Once the mainstay utility fuel, coal has been phased out year after year after year because it is terrible for the environment. 10 years ago, coal-based fuel was responsible [for] about 33% of electricity. Now it’s fallen to 15%.”
Yet, with the push to decommission nuclear plants, and the rising cost of natural gas, Cramer suggested that coal might need to be reintegrated into the energy mix. He argued that, despite the environmental drawbacks, the demand for power is now so great that coal’s long decline could be nearing its end.
“Under this president, coal could have… a renaissance. Sure, coal’s time has come and gone, but it will come again because the data center inspired energy crisis really is so pressing that there’s not really a choice anymore. Yes, the demand is that great, [and] we so foolishly mothballed good nuke plants that it wouldn’t surprise me if coal’s long decline may have finally run its course.”
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on January 22. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A coal-loading terminal with trucks lined up to be loaded.
Alliance Resource Partners, L.P. (NASDAQ:ARLP)
Number of Hedge Fund Holders: 5
Cramer mentioned Alliance Resource Partners, L.P. (NASDAQ:ARLP) during the episode, and here is what Mad Money’s host had to say:
“… then there’s another company called Alliance Resources Partners LP. It’s a master limited partnership that’s the largest coal producer in the eastern United States. Incredibly profitable company sells at less than nine times earnings as befits a slow to no growth enterprise and it’s not undiscovered because coal prices have actually done well thanks to overseas demand.
All that said, this market embraces anything energy, that means coal will soon be back and it makes a lot more sense now that coal is a champion in the White House. If you hear coal mentioned by the president and it’s picked up… Alliance Resources will be the one people will grab because it’s a master limited partnership. It has a terrific 10% yield, but the yield’s only that high because people think that the payout needs to be cut. May well be true.”
Alliance Resource (NASDAQ:ARLP) is a diversified natural resource company that produces and markets thermal and metallurgical coal. It also owns and leases oil and gas mineral interests, as well as coal reserves, and operates a coal loading terminal. During the first nine months of 2024, it sold 24,904 tons and produced 25,305 tons. During that time, the company generated nearly $1.61 million in coal sales.
However, total revenues for the period decreased by 4.3%, reaching $1.86 billion compared to $1.94 billion in 2023, mainly due to lower coal sales and transportation revenues, though higher oil and gas royalties and other revenues helped offset the drop. Alliance Resource’s (NASDAQ:ARLP) net income for the 2024 period was $344.5 million, or $2.64 per basic and diluted limited partner unit, down from $514.7 million, or $3.93 per unit, in 2023. The decrease in net income was primarily driven by the decline in revenues and an increase in total operating expenses.
Overall, ARLP ranks 8th on our list of stocks that Jim Cramer recently highlighted. While we acknowledge the potential of ARLP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ARLP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.