10 Best Coal Stocks To Buy Now According to Short Sellers

6. Arch Resources, Inc. (NYSE:ARCH)

Number of Hedge Fund Holders: 38

Short % of Shares Outstanding: 5.56%

Arch Resources, Inc. (NYSE:ARCH) is a leading producer of high-quality metallurgical coal serving the global steel industry. The company operates through two key segments: Metallurgical and Thermal coal. With large, modern, and efficient mines, Arch consistently sets industry benchmarks for safety and environmental practices.

In Q2 2024, Arch Resources, Inc. (NYSE:ARCH) reported total revenue of $609 million, down from $757 million in the prior-year period, reflecting weaker demand in the steel market and lower coking coal prices. The company achieved record production of 2.5 million tons of metallurgical coal. Despite the closure of the Baltimore shipping channel, Arch Resources still managed to ship 2 million tons of coking coal. Net income for Q2 fell to $15 million from $185 million in Q2 2023, largely due to lower sales volumes, higher shipping costs, and delayed shipments.

Cash and liquidity remained strong in Q2, with $279 million in cash and short-term investments. Arch also reduced its debt by $13 million, resulting in a net cash position of $146 million. Additionally, the company repurchased $15 million worth of shares and declared a $0.25 dividend per share for Q3 2024.

On August 21, Arch Resources announced a merger agreement with CONSOL to create a giant coal company, Core Natural Resources, aiming to expand its global market presence and meet rising global demand. It is expected to result in $110 million to $140 million in annual cost and operational synergies.

The stock has surged by over 11% in the past month, which reflects short-term optimism tied to share buybacks and dividends, while the 22.7% YTD decline is due to weaker global steel demand, lower coal prices, and logistical disruptions affecting earnings. However, the price movement is expected to improve in the future as logistical issues are resolved.

As of Q2 2024, 38 hedge funds, holding a combined investment of $397.2 million, are bullish on the stock, according to Insider Monkey’s database.