10 Best Coal Stocks To Buy Now According to Short Sellers

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

Number of Hedge Fund Holders: 6

Short % of Shares Outstanding: 1.76%

Natural Resource Partners L.P. (NYSE:NRP) owns and manages a diverse portfolio of U.S. properties that include coal, industrial minerals, and other natural resources. In addition to leasing these assets, NRP holds rights for carbon sequestration and renewable energy projects.

In Q2 2024, Natural Resource Partners L.P. (NYSE:NRP) reported $57.3 million in revenue, down 10.9%, as lower coal sales were partially offset by gains from coal property condemnation and carbon-neutral transactions. Metallurgical coal prices continued to decline during the quarter due to weakened steel demand, primarily resulting from the slowdown in China’s construction industry and the slower-than-expected recovery in Europe.

Net profit for the quarter dropped to $46.1 million from $70.3 million in the previous year. Mineral rights net income for Q2 2024 remained stable year-over-year. Soda ash net income fell by $23.3 million due to lower sales prices, influenced by new supply from China.

In terms of liquidity, NRP’s cash generation has remained strong. The company generated $57.3 million in free cash flow for the quarter, contributing to a robust $287 million over the past 12 months.

Looking ahead, NRP is exploring carbon-neutral revenue opportunities across its asset portfolio, with the potential for future value creation through initiatives like carbon sequestration, renewable energy generation, and lithium production.

The stock saw an uptick of 9.81% over the past month and 4.4% YTD, driven by strong cash flow generation and ongoing debt reduction. While coal and soda ash prices are expected to remain subdued due to weak demand, rising global steel demand, and anticipated coal export growth have contributed to the stock’s upside potential.

As of Q2 2024, six hedge funds with a combined investment of $26.1 million remain bullish on the stock, according to Insider Monkey’s database. Additionally, 1.76% of outstanding shares have been sold short, suggesting that most investors do not expect a significant decline in the stock’s value.