In this article, we will examine the 10 Best Coal Stocks based on the number of hedge funds holding them.
Research by The Business Research Company estimates the coal market to grow by 2.6% in 2025, reaching a market value of $669.84 billion. The continued dependency on coal for developing countries should sustain a growth rate of 2% until 2029. The APAC region is the region with the largest share of the market with China being the largest player. Slow economic growth in the region is the reason for the lackluster performance of the commodity in 2024.
Rising energy demand is the primary driver for the growth in the coal industry but a transition to renewable forms of energy forms a major headwind. The steel industry along with other manufacturing sectors provides a sustained demand for coal. These industries have not fared well in 2024, leading to unfavorable pricing for coal companies.
The production in the US is expected to remain flat in 2025 after registering a 12% drop in 2024. The demand from utility firms is expected to be met by the accumulation of inventory. India continues to be the destination where a majority of the exports of metallurgical and thermal coal take place. While the trend is expected to continue, a strengthening dollar is expected to lower the volumes in the near future.
The recent performance of coal companies has not been particularly good due to the overall macroeconomic environment. Companies are looking to diversify their assets and are exploring opportunities in other commodities like mining. Nonetheless, most of these companies have a healthy balance sheet that has enabled them to tide over this period. With a better year around the corner, there should be a revival in business for these companies.
Coal ETFs have generated returns of -4.34%, -17.86% and -20.86% for 1-month, 6-month and 1-year tenors. While big tech players pose a threat, there is immense potential to tap a constantly growing advertising pie that would benefit traditional players.
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For this article we picked 10 coal stocks trending on latest news. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A coal-loading terminal with trucks lined up to be loaded.
10. Ramaco Resources Inc. (NASDAQ:METC)
Number of Hedge Fund Investors: 16
Ramaco Resources Inc. (NASDAQ:METC) engages in the development, operation and sale of metallurgical coal. It offers a dividend yield of more than 5%, along with a high institutional and insider holding.
The guidance for 2025 is positive as METC expects annual production volume between 4.4-4.8 million tons. If the midpoint is taken as a reference, it reflects a 15% impressive growth from its 2024 level. The benefits from an increase in sales are expected to be offset by higher costs due to inflationary pressure but this does not prevent the bottom line from growing. The key drivers of growth for METC will be the Elk Creek and Berwind complexes. 66% of its sales for 2025 has already been booked with 1.6 million tons committed by North American customers and 1.3 million tons from export orders. METC trades at 14.72x its trailing EPS and considering the high dividend yield, the company seems to have an attractive valuation.
9. Hallador Energy Company (NASDAQ:HNRG)
Number of Hedge Fund Investors: 21
Hallador Energy Company (NASDAQ:HNRG) engages in the production of steam coal in the State of Indiana for the electric power generation industry. It is another stock in the list with high institutional holdings and is benefitting from the booming rise in data centers. In a recent deal, it bagged a $5 million cumulative order with a leading data center developer.
In spite of a challenging business environment, it managed to improve its gross margin from $8.11 per megawatt hour in the previous quarter to $16.36 in Q3-24. It has also executed a $60 million prepaid power purchase agreement that has the potential to turn into a long-term deal. Operating cash flows turned negative on account of restructuring of its Sunrise coal division but HNRG continues to reduce its debt level. The firm is looking to focus on its power segment, with coal offering a supportive role in the overall business.