Jul 08, 2022 16:35
Approximately one-third of the world's energy demand is met by coal-based energy. China, India, Australia, and Indonesia are the leading producers of coal worldwide, with China, the second-biggest economy in the world, accounting for around 65 percent of global coal consumption. According to the World Economic Forum, the combustion of this dark metal to create energy resulted in the most significant CO2 emissions of all energy production methods. This awareness has led to a slow drop in coal's popularity and usage over the past few years, as firms have adopted ESG standards and shifted to green energy.
When factories, offices, and companies shut down during the pandemic lockdowns of 2020, the worldwide energy demand plunged, as did the demand for coal, which decreased by 7 percent between 2018 and 2020, or by more than 500 million tonnes. The International Energy Agency (IEA) estimated that recovery in global energy demand in 2021 would result in a 2.6% increase in the demand for coal, headed by Asian countries that use more coal than European or North American countries. IEA also anticipated that skyrocketing natural gas costs and a surge in power demand would delay the structural fall of coal in the EU and US, causing their coal use to rise for the first time in over ten years.
Consider including a couple of coal equities in your portfolio. Consider these supercharged coal stocks that investors are monitoring.
Coal is a fossil fuel composed of sedimentary strata. Prior to millions of years ago, extensive layers of plants were buried beneath layers of soil and water since the early Earth consisted primarily of swamplands. In this marsh, plants and animals would perish and sink to the bottom. After many layers of plant and animal matter accumulated, a tremendous amount of pressure transformed the carbon in the plant and animal matter into coal.
Coal is an energy source because the compacted carbon in the coal burns far longer than other substances, such as wood.
In the 1800s, coal was used to heat houses and power the earliest locomotives and ships. Today, power is mainly generated by burning coal. When coal is burnt in a furnace, the coal's heat transforms the water in the furnace into steam. This steam is then utilized to power a turbine and produce energy, which is supplied to houses through a transformer.
The United States possesses more coal than any other nation; around 25 percent of the world's total coal. Before it can be used to create power, coal must be mined from the ground and processed into a powder. There are now coal mining activities in 25 states.
The word "coal-stock" refers to any corporation that mines, processes, or burns coal. A corporation with coal stock may be responsible for coal extraction from the soil, coal preparation, coal combustion, energy distribution, or all four operations.
Coal is plentiful, but it includes residues of nitrogen and sulfur pollutants. When coal is burned in a coal plant, these chemicals are released into the atmosphere. From there, the pollutants react with water vapor in the sky to generate acid rain, which falls back to the earth.
Coal combustion also produces carbon dioxide, an odorless, colorless gas that absorbs the Earth's heat as it builds up in the atmosphere. It is believed that burning fossil fuels like coal contributes to global warming, the steady rise in global temperatures. 'Clean coal' processes that remove specific contaminants from coal can reduce the environmental effect of coal-based electricity production.
First on our list of the finest coal stocks to invest in is Natural Resource Partners L.P. (NYSE: NRP). The corporation headquartered in Texas owns, operates, and leases mineral holdings in the United States. These places contain coal, soda ash, trona ore, and other natural resources. Its coal deposits are located in the United States' Illinois Basin, Appalachia, and Northern Powder River Basin. In addition to leasing out sections of its mineral assets for royalty payments, the corporation is also involved in the transportation and processing of coal.
The share price of Natural Resource Partners L.P. has increased a remarkable 142.52 percent over the past year, and 55.52 percent during the past six months, as of June 7. The firm has been paying dividends since 2003 and presently offers a yield of 6.12 percent.
Natural Resource Partners L.P. earned $52 million in free cash flow in the first quarter of 2022, a year-over-year increase of 120 percent. At the end of March, free cash flow for the preceding 12 months was $152 million, an increase of 85 percent year-over-year. Demand for metallurgical coal, thermal coal, and soda ash drove this expansion.
At the end of the first season, two hedge funds were positive on Natural Resource Partners L.P. shares, holding $23.25 million in total interests. Before the previous quarter, the same number of hedge funds held business shares. GoldenTree Asset Management held the bulk of these combined hedge fund positions and was the company's top shareholder in Q1, with a holding worth $23.22 million.
CONSOL Energy of Canonsburg, Pennsylvania, manufactures and exports bituminous thermal coal. The corporation owns and runs the Pennsylvania Mining Complex, the Baltimore Marine Terminal, and more than one billion tons of undeveloped deposits. The firm regularly utilizes its four longwalls, and in 2021, it implemented its fifth longwall to satisfy rising demand.
Alliance Resource Partners, L.P. is a diversified natural resource firm that supplies thermal and metallurgical coal to industrial customers and utilities throughout the United States. The corporation also holds substantial holdings in oil and gas resources. Alliance Resource Partners, L.P. has about 547.1 million tons of proved and probable coal mineral reserves and 1.17 billion tons of measured, indicated, and inferred coal resources in Indiana, Kentucky, Illinois, Pennsylvania, Maryland, and West Virginia at the beginning of 2022.
Mark Reichman of Noble Capital commenced coverage of Alliance Resource Partners, L.P. on March 30 with an "Outperform" rating and a $22 price target. Reichman says that the company's robust cash flow production is anticipated to support continuing expansion in its oil and natural gas royalties business and diversification into alternative energy sources. As of June 7, Alliance Resource Partners, L.P. has gained a staggering 218.78 percent over the past year and 99.05 percent over the past six months. Additionally, the firm is a strong dividend provider, with a yield of 6.70 percent.
At the end of the first quarter, five of the 900+ top hedge funds monitored by Insider Monkey held holdings in Alliance Resource Partners. L.P. Magnolia Capital Fund was its largest stakeholder in Q1 with a $76.4 million investment.
Alliance Resource Partners, L.P. reported sales of $460,9 million for the first quarter of 2022, which was $11.7 million less than analysts' estimates but a 44.64 percent increase year-over-year.
This coal stock is the world's largest private coal producer and controls the world's largest mine for it. They take pleasure in conducting business with little environmental effect, and Additionally, it performs some land rehabilitation.
In addition, Peabody has received other accolades for excellence. A worldwide prize for responsible mining is one of them, and another is a Queensland, Australia, award honoring women in the mining industry.
Warrior is a coal company that pays a modest dividend but a payout. Currently, its profit margins are pretty large, which is expected given the market's growth. In addition, shares are reaching an all-time high.
The firm has some of the deepest mines in the world in Alabama. From them, Warrior can mine around 8 million tons per year. However, its reserves exceed 300 million tons. Thus, the potential for capacity expansion is evident. Moreover, if it decides not to, it will have a substantial coal stockpile that will last many years.
Hallador Energy Company is involved in developing, manufacturing, and distributing steam coal to Indiana's electric power generation business. Its coal business, Sunrise Coal LLC, is the second-biggest coal producer in Indiana, yearly generating over 6 million tons of coal at its Oaktown complex. The firm employs one of the safest and most ecologically friendly coal extraction techniques in its underground coal mines: room-and-pillar.
At the end of March, eight hedge funds out of the more than 900 funds monitored by Insider Monkey held favorable positions in Hallador Energy Company, compared to 9 hedge funds a quarter earlier. The total value of hedge fund holdings in the first quarter was $8.35 million.
Hallador Energy Company's shares have risen 95.47 percent so far in 2022 and 114.05 percent in the previous six months as of June 7 due to rising energy and coal prices. The company's sales for FY2021 were $248 million, while its revenue for Q4 was $65.5 million, which was $1.19 million less than anticipated.
Peabody is the United States' largest coal supplier, and arch Resources is the second-largest company. This coal stock has performed exceptionally well over the last year and a half, and it has increased by almost 230 percent and is still rising.
Arch offers a dividend of 1 percent. They operate mines in West Virginia, Wyoming, and Colorado from St. Louis. It primarily serves the steel industry, an essential requirement for infrastructure enhancements.
BHP Group is an Australian company engaged in the global mining and production of copper, iron ore, uranium, gold, and coal. It operates in over 90 areas worldwide, including Australia, the United States, Canada, and Chile. With a market capitalization of over $169 billion, BHP Group is one of the world's largest mining firms. It has paid dividends for 22 years and has boosted its distribution to shareholders for the past five years in a row. As of June 8, it gives a fantastic return of 10.11 percent.
Following merging its oil and gas business with Woodside to become an independent energy firm, Goldman Sachs analyst Paul Young restored coverage of BHP Group on June 1 with a 'Buy' rating and a price target of $51.20, citing an attractive value and upside from copper growth. Young adds that the company has traded at a premium to its worldwide mining rivals over the past decade and anticipates that this pattern will continue.
In 2021, BHP Group's annual revenue was $60,8 billion, a 41.66 percent increase over its annual revenue in 2020 of $42.9 billion.
At the end of the first quarter, 19 hedge funds held long holdings in BHP Group worth $2.24 billion. This decreased from the previous season when 25 hedge funds held holdings totaling $2.02 billion. Fisher Asset Management grew its holdings in BHP Group by 117 percent in the first quarter of 2022 to 16.9 million shares worth $1.3 billion, making it the company's largest stakeholder.
Morien is a Canadian coal company headquartered in Nova Scotia. The executive team has several decades of expertise in various specialties. Therefore, they are well-versed in the business. Furthermore, the corporation strives to continue boosting profitability and productivity. Morien has also recently sold land interests in the United States for almost $400,000
In Virginia, West Virginia, and Pennsylvania, Ramaco Resources, Inc. is involved in mining, producing, and selling metallurgical coal. The firm's portfolio of mineral properties includes the Elk Creek, Berwind, RAM Mine, and Knox Creek mines. It provides coal to blast furnace steel mills and coke facilities in the United States and global customers of metallurgical coal. As of June 7, shares of Ramaco Resources, Inc. have risen 194.18 percent over the last year, making it one of the most profitable companies in the coal market.
Ramaco Resources, Inc. reported revenues of $154.9 million for the quarter ended in March, representing a year-over-year increase of 256.42 percent but falling $11.5 million short of average projections. EPS also came in $0.53 behind forecasts.
Christopher LaFemina of Jefferies raised Ramaco Resources, Inc. on June 7 from 'Hold' to 'Buy' with a price objective of $25, up from $16. He believes the mining industry is undervalued and will outperform when China recovers. LaFemina increased his coal price and iron ore projections and improved a few of the group's businesses.
After the first quarter, 22 hedge funds held $38.7 million in Ramaco Resources, Inc shares. This indicates that investor trust in the firm had increased over the previous quarter when 14 hedge funds held stakes totaling $13.2 million. Millennium Management was the largest stakeholder in Ramaco Resources, Inc. in the first quarter, expanding its stake by more than 500 percent to around 524,000 shares worth $8.27 million.
Anglo Pacific is a coal company with a London-based headquarters. Consequently, it is also listed on the London Stock Exchange. It works over five continents, including Australia, North and South America, and Africa.
In addition to coal, Anglo Pacific manufactures several other fundamental resources. In addition, they prioritize keeping their assets clean and safe for the environment.
Teck Resources Ltd is a Canadian mining corporation specializing in the production and global distribution of steelmaking coal, gold, copper, lead, and silver, as well as chemicals, fertilizers, and other metals. As one of the largest global mining companies, Teck Resources Ltd stands to gain due to inflation and a supply bottleneck driving up the costs of vital natural resources. It has gained 57.13 percent this year and 93.16 percent over the past year as of June 8.
On April 27, Teck Resources Ltd declared profits per share of $2.31 for the first quarter, above expectations by $0.06. The quarterly revenue of $3.93 billion beat analysts' projections by $16.1 million and marked an increase of 89.76 percent year-over-year. B. Riley analyst Lucas Pipes maintained Teck Resources Ltd's 'Buy' rating and boosted the price target from C$57 to C$58 on April 28 after the company surpassed Q1 estimates.
In the first quarter of 2022, Soroban Capital Partners was the top stakeholder in Teck Resources Ltd, with a $495 million stake. At the end of the first season, 56 hedge funds held a collective $2.64 billion worth of Teck Resources Ltd holdings. This was in contrast to the previous quarter when forty hedge funds held $1.62 billion worth of interests in the mining company.
With higher-than-average dividends and lower P/E ratios, coal — and the energy sector as a whole — may be an excellent income-generating diversifier for any portfolio. However, it is essential to note that you should never invest your whole financial portfolio in a single place. If you opt to invest in coal equities, you should add them to a more extensive portfolio comprising the whole market index and S&P 500 funds.
Jul 08, 2022 15:29
Jul 11, 2022 15:07