In this article, we will discuss the 10 Best Coal Stocks To Buy Now According to Short Sellers.
Coal is highly valued for its energy content and is widely used across the globe for electricity generation, as well as for the production of steel and cement. It is extracted using either the opencast or underground mining methods.
The thermal coal sector experienced a year-to-date (YTD) decline of 0.47%, in contrast to the broader market’s 19.55% increase. The coal industry has been grappling with significant challenges, leading to its underperformance in recent years. One of the primary reasons is the sharp decline in coal usage for electricity generation in the U.S., as utility operators increasingly shift toward renewable energy sources and focus on decarbonization. The planned retirement of coal units and stricter emission regulations, aimed at achieving carbon-neutral electricity by 2030, have further accelerated this decline. With coal’s share in the U.S. power generation expected to drop to just 14% by 2025, the industry faces mounting pressure as demand continues to dwindle domestically, according to a report by the Energy Information Administration.
Despite these headwinds, there are potential signs of recovery, especially on the global front. U.S. coal exports are projected to grow as demand rises in European markets, partly driven by the ongoing Russia-Ukraine conflict. Additionally, the expected rebound in global steel production, which heavily relies on coal, is likely to boost export volumes.
Coal Industry Outlook
Coal has long been valued for its role in reducing poverty by providing job opportunities in regions with few employment prospects. In addition, coal mining stimulates economic growth by attracting investment and generating local government revenue.
While “green companies” have advocated for wind and solar power as the cheapest forms of electricity, claiming that transitioning to renewables is key to achieving net-zero emissions, the reality has proven different. The transition to renewable energy has struggled to address the “Energy Trilemma,” which emphasizes balancing energy security, affordability, and sustainability.
Nevertheless, Ember’s Global Electricity Review 2023 predicts that wind and solar energy will replace coal by 2030, contributing 41% to global electricity generation, a significant jump from 2021. This shift will require coal generation to decrease by 54% and gas generation to decrease by 24%. At the same time, global electricity demand is expected to rise, with an average annual increase of 3.7% from 2021 to 2030.
With 60% of its electricity powered by coal, China’s share of global electricity consumption is expected to rise to one-third by 2025, up from one-quarter in 2015, according to the International Energy Agency. However, according to Sinopec, China’s coal power consumption is expected to halt its growth by 2025, with non-fossil fuel sources predicted to dominate the country’s power mix by 2045. Check out our article ‘25 Largest Coal Producing Countries in the World‘ on Insider Monkey. You’ll find that China, India, and Indonesia are the top three coal producers, with China leading global coal production for decades and expected to continue dominating in the foreseeable future.
Coal Power Stays Important in the U.S. Energy Mix
The European Electricity Review of 2024 reported a record 19% drop in fossil fuel generation last year, with coal and gas generation experiencing an unprecedented decline. Coal generation declined by 26%, accounting for just 12% of the EU’s electricity mix in 2023, while gas generation dropped by 15%, accounting for 17%.
Similarly, the U.S. coal-fired power generation reached its lowest level in four years during the first four months of 2024 but still accounted for 15.6% of the national power mix. While coal output continues to decline, renewable energy growth, particularly wind power, has been slower than anticipated. This has kept coal’s share significant, even as the country moves toward cleaner energy sources.
Having discussed the broader coal market, let’s now move on to our list of the 10 Best Coal Stocks To Buy Now According to Short Sellers.
A coal-loading terminal with trucks lined up to be loaded.
Methodology
To compile our list of the 10 Best Coal Stocks to Buy Now According to Short Sellers, we ranked the holdings by the percentage of outstanding shares that were sold short. Stocks with the lowest short interest were then chosen. Additionally, we included the number of hedge funds that had invested in these stocks at the end of the second quarter of 2024, according to Insider Monkey’s database. The stocks are ranked in descending order of short interest.
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10. Alpha Metallurgical Resources, Inc. (NYSE:AMR)
Number of Hedge Fund Holders: 24
Short % of Shares Outstanding: 8.40%
Alpha Metallurgical Resources, Inc. (NYSE:AMR), a Tennessee-based mining company, provides both metallurgical (met) coal and thermal coal to customers worldwide. Known for its high-quality reserves and significant port capacity, Alpha plays a key role in supplying essential materials to the global steel industry.
In Q2 2024, Alpha Metallurgical Resources, Inc. (NYSE:AMR) reported revenue of $804 million, a 6.3% decline compared to the same period last year, primarily driven by softer coal prices and weaker global steel demand. The weighted average realization for met coal also dropped to $145.94 per ton, reflecting reduced demand, particularly in the export met tons and thermal byproduct segments. Despite this, the company managed to ship 4.6 million tons of coal, meeting internal targets.
Net income for the quarter came in at $58.9 million, representing a sharp 67.5% decline from the previous quarter, driven by lower revenue and increased costs, including the cost of sales and SG&A expenses. Nonetheless, Alpha exceeded earnings expectations, reporting an EPS of $4.49, beating analyst estimates.
Alpha Metallurgical Resources, Inc. (NYSE:AMR)’s total liquidity in Q2 was $356.7 million, up $68.6 million from Q1, with long-term debt of $8.6 million and no ABL borrowings. The company also repurchased 6.6 million shares for $1.1 billion under its $1.5 billion share repurchase program, reflecting strategic liquidity management aimed at shareholder returns.
The company’s share price has dropped 11.23% in the past month and 37.55% YTD, as a result of weakened steel demand and ongoing geopolitical uncertainty, which have negatively impacted the metallurgical coal markets.
Despite these challenges, as of Q2 2024, 24 hedge funds, with a combined investment of $481.6 million, are bullish on the stock, according to Insider Monkey’s database. Moreover, 8.40% of outstanding shares have been sold short, earning AMR a place on our list of the best coal stocks to buy now.
9. Ramaco Resources, Inc. (NASDAQ:METC)
Number of Hedge Fund Holders: 18
Short % of Shares Outstanding: 6.73%
Ramaco Resources, Inc. (NASDAQ:METC) is a producer of high-quality metallurgical coal in Virginia and is expanding into rare earth and critical mineral production in Wyoming. The company supplies metallurgical coal to blast furnace steel mills and coke plants across the U.S., as well as to international markets.
In Q2 2024, Ramaco Resources, Inc. (NASDAQ:METC) reported revenue of $155.3 million, an increase of 13% from the previous year. Production rose by 7% due to improved productivity and labor availability. However, quarterly sales volumes declined, primarily due to transportation constraints. Realized prices fell by 8%, reflecting weaker market conditions and lower indexed pricing. Additionally, net income reached $5.5 million, more than doubling compared to the first quarter, largely driven by an 8% reduction in cash costs.
Ramaco Resources reported a total liquidity position of $71.3 million, which included $27.6 million in cash and an additional $43.7 million available under its revolving credit facility. Looking ahead, CapEx is expected to decline in the second half of 2024 as major projects, such as the Stonecoal Alma mine, progress toward completion.
In August 2024, Ramaco Resources advanced its Brook Mine rare earth project in Wyoming. The company partnered with Fluor Corporation and Hazen Research to support mineral testing and to design a demonstration plant, aiming to begin construction by mid-2025.
Despite a 16.20% dip in its stock over the past month and a 40.98% decline YTD, largely due to reduced U.S. coal demand and the energy sector’s shift to renewables, Ramaco could see a recovery through rising global coal exports and a potential rebound in steel production.
As of Q2 2024, 18 hedge funds, with a combined investment of $40.5 million, remain bullish on the stock, according to Insider Monkey’s database.
8. SunCoke Energy, Inc. (NYSE:SXC)
Number of Hedge Fund Holders: 18
Short % of Shares Outstanding: 6.19%
SunCoke Energy, Inc. (NYSE:SXC) operates as an independent coke producer across the Americas and Brazil through three main segments: Domestic Coke, Brazil Coke, and Logistics. It supplies both metallurgical and thermal coal and offers handling and mixing services to various manufacturing sectors.
In Q2 2024, SunCoke Energy, Inc. (NYSE:SXC) reported revenue of $470.9 million, a dip of 12% compared to the previous year. The domestic coke segment faced challenges, with declining sales volumes due to lower blast coke sales and weaker coal-to-coke conversion yields. However, the logistics segment helped offset this decline, which posted higher transloading volumes and contributed $12.2 million in adjusted EBITDA.
Net income improved to $21.5 million in Q2, up 5.4% from the previous year, due to reduced depreciation, taxes, and interest expenses. Moreover, the company reported an EPS of $0.25, beating the expected EPS of $0.22.
SunCoke Energy, Inc. (NYSE:SXC) maintained a strong cash and liquidity position, ending the quarter with $81.9 million in cash and access to a $350 million undrawn revolver. Additionally, the Board of Directors approved a 20% increase in the quarterly dividend, raising it to $0.12 per share of common stock.
Looking ahead, the company expects solid performance for the rest of the year, supported by strong logistics results and reaffirmed full-year EBITDA guidance of $240 million to $255 million.
In terms of price movement, SunCoke Energy, Inc. (NYSE:SXC)’s price drop of 6.42% over the past month and 24.02% YTD is likely due to lower domestic coke sales volumes and weaker coal-to-coke conversion yields. Broader market conditions, such as fluctuations in coal prices and reduced demand for coke in the steel industry, may have also contributed to investor concerns.
As of Q2 2024, 18 hedge funds, holding a combined investment of $46 million, are bullish on the stock, according to Insider Monkey’s database. Moreover, 6.19% of outstanding shares have been sold short, earning SXC a place on our list of the best coal stocks to buy now.
7. CONSOL Energy Inc. (NYSE:CEIX)
Number of Hedge Fund Holders: 30
Short % of Shares Outstanding: 5.98%
CONSOL Energy Inc. (NYSE:CEIX) is a Pennsylvania-based producer and exporter of high-Btu bituminous thermal coal and metallurgical coal. The company operates through two segments: Pennsylvania Mining Complex (PAMC) and CONSOL Marine Terminal. The PAMC segment focuses on mining, processing, and marketing bituminous coal. The CONSOL Marine Terminal segment offers coal export services via the Port of Baltimore.
In Q2 2024, CONSOL Energy Inc.’s (NYSE:CEIX) total revenue reached $384 million, with the PAMC segment accounting for 5.8 million tons sold. However, in Q2, revenue saw a decline of 36% due to reduced export capacity caused by the collapse of the FSK Bridge. Although volumes dropped 9% compared to the prior year, strategic reallocation of export shipments mitigated the potential impact.
Net income for the quarter was $58 million, while adjusted EBITDA totaled $125 million. The drop in profitability was driven by increased transportation costs from rerouted shipments following the FSK Bridge collapse. Higher cash costs per ton, due to lower production volumes and inflation, also contributed.
In terms of liquidity, CONSOL Energy Inc. (NYSE:CEIX) maintained a strong balance sheet, reducing debt by $3 million and continuing share buybacks, with $13 million allocated in Q2. Additionally, free cash flow grew to $59 million, compared to $41 million in Q1 2024, driven by cost management and maintaining customer contracts.
CONSOL Energy’s 1.6% share price rise over the past month reflects optimism surrounding buybacks and recovery efforts after the Francis Scott Key Bridge collapse. However, a 3.18% YTD decline is due to concerns over export capacity and rising costs. Nevertheless, with recovery underway and improved production at Itmann, the company is poised for future gains. It is among the best coal stocks on our list.
As of Q2 2024, 30 hedge funds, holding a combined investment of $348.1 million, are bullish on the stock, according to Insider Monkey’s database.
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.
5. Alliance Resource Partners, LP (NASDAQ:ARLP)
Number of Hedge Fund Holders: 5
Short % of Shares Outstanding: 3.24%
Alliance Resource Partners, LP (NASDAQ:ARLP) is a diversified energy company and the largest coal producer in the eastern U.S., providing reliable and affordable energy to major utilities, as well as metallurgical, and industrial users both domestically and internationally.
In Q2 2024, Alliance Resource Partners, LP (NASDAQ:ARLP) reported a total revenue of $593.4 million, down 7.6% from the previous year. This decline was largely attributed to delayed coal shipments and lower export demand. Coal sales volume dropped by 11.8% YoY, with production down 10.2%, but was slightly offset by a 3.8% increase in coal sales prices due to improved domestic price realizations.
Net income for the quarter fell to $100.2 million, down from $169.8 million in the previous year, primarily due to higher operating expenses. The increase in expenses, particularly in the Appalachian region, was driven by challenging mining conditions and longwall moves.
In terms of liquidity, Alliance Resource Partners, LP (NASDAQ:ARLP) strengthened its balance sheet by issuing $400 million in senior unsecured notes and redeeming $284.6 million in debt, boosting liquidity to $666 million.
In January 2024, Alliance Resource Partners and Infinitum announced a partnership to introduce motor technology to the mining sector. This move aligns with the company’s goal of enhancing productivity and cutting operational costs while also supporting efforts to decarbonize and electrify heavy machinery.
Despite declining profitability, Alliance Resource Partners, LP (NASDAQ:ARLP) saw an uptick of 1.89% over the past month and 14.73% YTD, likely driven by a strong liquidity position and increasing coal sales prices. In addition, the company’s growth prospects in its oil and gas royalties segment, coupled with rising electricity demand, have bolstered investor optimism for long-term potential.
As of Q2 2024, five hedge funds with a combined investment of $93.1 million are bullish on the stock, according to Insider Monkey’s database. ARLP is among the best coal stocks on our list.
4. Hallador Energy Company (NASDAQ:HNRG)
Number of Hedge Fund Holders: 20
Short % of Shares Outstanding: 3.03%
Hallador Energy Company (NASDAQ:HNRG), headquartered in Terre Haute, Indiana, is a vertically integrated independent power producer. The company operates two main businesses: Hallador Power Company, LLC, which generates electricity, and Sunrise Coal, LLC, which produces and supplies coal to power stations and other customers.
In Q2 2024, Hallador Energy Company (NASDAQ:HNRG) reported a total revenue of $90.9 million, a sharp decline from $161.2 million in Q2 2023. Coal sales dropped to $32.8 million due to a deliberate reduction in coal production as part of Sunrise Coal’s restructuring and lower demand caused by falling natural gas prices.
Net loss for the quarter stood at $10.2 million, a significant shift from $16.9 million in net income the previous year, primarily due to reduced demand for coal and lower dispatch rates at coal-fired power plants.
Despite these setbacks, operating cash flow improved to $23.5 million, up from $18.1 million, aided by cost-cutting measures and operational adjustments. Moreover, Hallador reduced total debt by 41%, raised $27.9 million through an at-the-market (ATM) offering, and converted $11 million of unsecured notes into stock, boosting overall liquidity.
Hallador Energy Company (NASDAQ:HNRG) is restructuring its Sunrise Coal division to improve efficiency by idling higher-cost mines, reducing capital reinvestment, and focusing on low-cost production, aiming for 4.5 million tons of coal annually while cutting 110 jobs.
The stock rose 14.29% over the past month, driven by improved liquidity and restructuring progress. However, the 23.56% YTD decline reflects earlier challenges, including lower coal demand and electricity sales. Notably, a recent $114,000 stock purchase by the company’s director signals confidence in its prospects.
As of Q2 2024, 20 hedge funds with a combined investment of $34.0 million are bullish on the stock, according to Insider Monkey’s database. Additionally, 3.03% of outstanding shares have been sold short.
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.
2. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 69
Short % of Shares Outstanding: 1.23%
Headquartered in Vancouver, Canada, Teck Resources Limited (NYSE:TECK) is involved in the exploration, acquisition, development, production, and sale of natural resources. Its product range includes steelmaking coal, copper, zinc, industrial products, fertilizers, and other metals.
In Q2 2024, Teck Resources Limited (NYSE:TECK) reported a total revenue of $2.9 billion, a 10.1% increase, driven by record copper production (51,300 tons) and strong sales in the steelmaking coal segment, which contributed 52% of total revenue. Production from all coal plants was strong in Q2, driven by improved plant reliability.
Net profit declined by 28.8%, primarily due to higher operating costs from the ramp-up of Quebrada Blanca (QB) Phase 2 and the impact of non-controlling interest (NCI) after the sale of the coal business. Additionally, Teck reported an EPS of $0.573, beating analysts’ expectations.
In terms of liquidity, Teck Resources Limited (NYSE:TECK)’s position strengthened with $6.4 billion in cash, including $5.4 billion from the sale of the coal business, and a net cash position of $2.1 billion after debt repayments.
In September 2024, the company unveiled a new structure of two regional divisions: North America and Latin America, to sharpen its focus on energy transition metals. The restructuring aims to boost copper growth, streamline operations, and enhance shareholder value.
Teck’s 17.2% YTD gain is driven by strong copper growth, the QB ramp-up, and the sale of its coal business, positioning the company as a pure-play energy transition metals company.
As of Q2 2024, 69 hedge funds, with a combined investment of $2.0 billion, are bullish on the stock, according to Insider Monkey’s database.
1. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 22
Short % of Shares Outstanding: 0.41%
Headquartered in Melbourne, Australia, BHP Group Limited (NYSE:BHP) engages in the exploration, development, production, and processing of iron ore, metallurgical coal, and copper. Its Copper segment also includes mining silver, lead, zinc, molybdenum, uranium, and gold, while its coal segment focuses on metallurgical and energy coal.
In Q4 2024, BHP Group Limited (NYSE:BHP) reported a $1.8 billion revenue increase, bringing total revenue to $55.7 billion, driven by higher iron ore and copper prices. This growth was partially offset by lower energy coal and nickel prices, along with reduced steelmaking coal volumes following the Blackwater and Daunia divestment in April 2024. Due to the divestment, the company expects a 23% decline in its steelmaking coal production in 2025.
However, net earnings were $7.9 billion, impacted by $5.8 billion in exceptional charges, including a $2.7 billion impairment on its Western Australia Nickel business and a $3.8 billion charge related to the Samarco Dam incident.
BHP Group Limited (NYSE:BHP) maintained strong liquidity in Q4 2024, generating over $20 billion in net operating cash flow. This solid cash generation allowed the company to reduce its net debt to $9.1 billion while continuing to invest $9.3 billion in growth initiatives.
On 30 August 2024, the South Australian government initiated the application process for BHP’s Olympic Dam expansion. The company aims to increase copper production to 500,000 tons by the early 2030s and possibly 650,000 tons by the mid-2030s.
The stock’s 0.33% rise over the past month is likely driven by optimism surrounding the Olympic Dam expansion and plans to boost copper output. However, the 20.53% YTD decline is mainly due to earlier copper price surges, followed by a drop caused by oversupply and weaker economic indicators, such as sluggish U.S. job openings and demand concerns.
As of Q2 2024, 22 hedge funds, holding a combined investment of $1.3 billion, are bullish on the stock, as per Insider Monkey’s database. Moreover, 0.41% of shares outstanding were sold short, suggesting that most investors do not expect a significant decline in the stock’s value.
BHP is the best coal stock to buy according to short sellers. While we acknowledge the potential of BHP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BHP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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