The global energy crunch, the Russia-Ukraine war, and rising gas prices pushed coal prices to exceed $100 per ton earlier this month for the first time in 13 years. Furthermore, with several countries banning Russian coal imports, the supply crunch is pushing prices higher. Earlier this month, the European Union moved to ban coal imports from Russia. So, as demand for electricity and power generation continues to rise, the coal industry should continue witnessing an uptrend in the coming months.
In addition, according to EIA, U.S. coal production is projected to increase by 43 million short tons (MMst) in 2022, and coal exports are also estimated to multiply with ramped-up production. According to AmericaNewsHour, the global clean coal technology market is predicted to grow at a 3.2% CAGR through 2027.
Given this backdrop, coal stocks Alpha Metallurgical Resources, Inc. (AMR), CONSOL Energy Inc. (CEIX), and Peabody Energy Corporation (BTU) have witnessed a solid run lately, and their fundamental strength should help them keep climbing. So, we think these stocks could be solid bets now.
Alpha Metallurgical Resources, Inc. (AMR)
AMR in Bristol, Tenn., is a mining company that produces, processes, and sells met and thermal coal in Virginia and West Virginia. Currently, the company operates approximately 20 active mines and eight coal preparation and load-out facilities.
On March 7, 2022, Andy Eidson, AMR’s president, and chief financial officer, said, “We look forward to future quarters when our 2022 domestic realizations are expected to improve significantly as a result of the negotiations completed by our sales team late last year.”
AMR’s coal revenues came in at $826.56 million for the fourth quarter, ended Dec. 31, 2021, up 155.6% year-over-year. Its total revenues were $828.22 million, up 155.7% year-over-year. Furthermore, its net income was $257.44 million, compared to a $100.15 million loss in the previous period. Also, its EPS came in at $13.45, compared to a $5.47 loss per share in the year-ago period.
AMR’s revenue is expected to increase 50.2% to $3.39 billion in 2022. Its EPS is expected to grow 314.3% to $63.39 in 2022. It surpassed EPS estimates in three of the four trailing quarters. Over the past month, the stock has gained 31.2% to close yesterday’s trading session at $158.28.
AMR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
AMR has an A grade for Growth and Momentum and a B grade for Value and Quality. Within the A-rated Industrial - Services industry, it is ranked #8 of 89 stocks. Click here to see the additional POWR Ratings for Stability and Sentiment for AMR.
Click here to check out our Industrial Sector Report for 2022
CONSOL Energy Inc. (CEIX)
CEIX produces and exports bituminous coal in the United States. It operates through PAMC, CONSOL Marine Terminal, and Other segments. The Canonsburg, Pa., company possesses approximately 612.1 million tons of proven and probable coal reserves at PAMC.
On Feb. 8, 2022, CEIX’s management said, “Looking ahead, we are near fully-contracted for calendar year 2022 and have successfully layered in additional contract tons for 2023 and beyond. We recently entered long-term coal supply contracts in the export market with multiple buyers for approximately 7 million tons to be delivered through 2024, primarily in the industrial market.”
For the fourth quarter, ended Dec. 31, 2021, CEIX’s coal revenue increased 25% year-over-year to $288.10 million. In addition, the company’s total revenue and other income came in at $480.63 million, up 48.1% year-over-year. Its net income was $117.32 million, up 796.6% year-over-year, while its EPS came in at $3.30, up 573.5% year-over-year.
CEIX’s revenue is expected to be $1.55 billion in its fiscal 2022, representing a 23.2% year-over-year rise. The company’s EPS is expected to increase 813.5% to $8.77 in 2022. And over the past month, the stock has gained 40% in price to close yesterday’s trading session at $47.33.
It is no surprise that CEIX has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Momentum and a B grade for Growth, Sentiment, and Quality.
CEIX is ranked #6 of 11 stocks in the A-rated Coal industry. Click here to see the additional POWR Ratings for CEIX (Value and Stability).
Peabody Energy Corporation (BTU)
BTU in St. Louis, Mo., is in the coal mining business in the United States, Japan, Taiwan, Australia, India, Indonesia, China, Vietnam, South Korea, and internationally. The company operates through Seaborne Thermal Mining; Seaborne Metallurgical Mining; Powder River Basin Mining; and Other U.S. Thermal Mining segments.
On March 1, 2022, BTU announced the launch of R3 Renewables LLC, a renewable energy development company, in a joint venture with Riverstone Credit Partners and Summit Partners Credit Advisors. Jim Grech, BTU’s President, and CEO said, “Both Riverstone and Summit Partners have deep experience across energy and growth sectors, and we believe R3 will benefit from their collective perspective on renewable energy solutions.”
BTU’s revenues increased 71.5% year-over-year to $1.26 billion for the fourth quarter, ended Dec. 31, 2021. Its operating profit came in at $521 million, compared to a $108.10 million loss in the prior-year period. In addition, its net income came in at $513 million, compared to a $129.20 million loss, while its EPS came in at $3.93, compared to a $1.32 loss per share in the year-ago period.
For its fiscal year 2022, analysts expect BTU’s revenue to increase 38.8% to $4.60 billion. In addition, the company’s EPS is expected to increase 143.2% to $7.83 in 2022. The stock has gained 42% in price over the past month to close yesterday’s trading session at $31.06.
BTU’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Momentum and a B grade for Growth, Value, and Quality.
Click here to see BTU’s rating for Stability and Sentiment as well. BTU is ranked #3 of 11 stocks in the Coal industry.
AMR shares were trading at $152.91 per share on Wednesday morning, down $5.37 (-3.39%). Year-to-date, AMR has gained 150.47%, versus a -5.60% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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