In this piece, we will take a look at the 11 best coal mining stocks to invest in. To know more about the top stocks, go directly to 5 Best Coal Mining Stocks To Invest In.
Coal has been recognized for its role in alleviating poverty through coal mining by offering employment opportunities in areas with limited or no jobs. Also, coal mining can spur economic growth by attracting investment and generating revenue for local governments. It is most reliable, and constant power of energy in areas that use coal as a primary energy source thus contributing to enhanced productivity and quality of life. Despite being the most reliable and abundant source of energy, coal consumption has been witnessed to partially decline particularly in the United States due to apprehensions regarding the impact of carbon dioxide and other emissions on climate.
Predominantly “green companies” have been claiming for a long time now that wind and solar are the cheapest forms of electricity and transitioning to renewable energy will contribute to the broader target of achieving net zero emissions. However, the opposite is true in this case as the transition to renewable energy sources has been witnessed to fail because it misaligns with the “Energy Trilemma” of focusing on security, affordability, and sustainability.
According to Ernst & Young’s 2024 report, “Top 10 business risks and opportunities for mining and metals 2024”, ESG poses both substantial risks and considerable opportunities for miners that can contribute to achieving long-term value for all stakeholders. Moving forward, coal asset divestment continues because it produces carbon that represents a significant proportion of GHG emissions. Many diversifier miners have either divested their coal assets or set a timeline for closure. As per the latest IEA market report, a decline of 2.3% has been expected to take place globally in the demand for coal by 2026 in comparison to 2023.
Coal Industry Outlook 2024
China, India and Indonesia are the three largest coal producers. China, among them, has dominated global coal production for decades and is likely to continue as the foremost coal producer in the foreseeable future. Despite setting renewable energy targets, the growing economies of China and India continue to remain the top consumers of coal in efforts to fuel economic growth. China is the world’s largest energy consumer and over 60% of its electricity is generated by coal. Based on the projections from Energy Watchdog International Energy Agency, China’s share of global electricity consumption will surge to one-third by 2025, marking a substantial increase from a quarter in 2015.
On the contrary, according to Ember’s Global Electricity Review 2023, wind and solar energy are expected to replace coal by 2030, it will contribute to 41% of global electricity generation with a significant increase of 10% in 2021. Simultaneously, this transition demands a reduction in coal generation by 54% and gas generation by 28%. A notable surge in electricity demand with an average annual increase of 3.7% from 2021 to 2030 is also anticipated in this period.
Coal’s contribution to Energy Mix in 2024
According to the European Electricity Review of 2024, fossil generation plummeted by a record 19% last year with an unprecedented collapse in coal and gas generation. Coal generation fell by 26% to its lowest level accounting for only 12% of the EU electricity mix in 2023. Also, gas generation fell by 15%, which accounts for 17% of the total EU generation in 2023.
In the US alone, about 60% of 4.18 trillion kilowatt-hours of energy was generated last year from fossil fuels that included coal, according to the US Energy Information Administration. Coal amounted for roughly more than 16% of electricity generation in the nation.
Some of the best coal stocks include Teck Resources Limited (NYSE:TECK), Arch Resources, Inc. (NYSE:ARCH), Peabody Energy Corporation (NYSE:BTU), and others. For this, we decided to take a look at the 11 best coal mining stocks to invest in.
11 Best Coal Mining Stocks To Invest In
Our Methodology
To compile the list of the best coal mining stocks to invest in, we filtered companies listed on the New York Stock Exchange and Nasdaq that were engaged in coal mining operations. The stocks were ranked based on Insider Monkey’s database of 933 hedge funds tracked at the end of Q4 2023. The ranking was based on the ascending order of the number of hedge fund investors in each stock and then the top 11 coal mining stocks were picked for investment purposes. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Coal Mining Stocks To Invest In
11. Alliance Resource Partners, L.P. (NASDAQ:ARLP)
Number of Hedge Fund Holders: 6
Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the company involved in the production and marketing of coal. Alliance Resource Partners, L.P. (NASDAQ: ARLP) being a diversified coal and producer and marketer plays a significant role in the energy sector predominantly in regions where coal remains a vital source of electricity generation.
The company is the largest coal producer in the eastern United States that caters to both domestic and international utility and industrial sectors. Alliance Resource Partners, L.P. (NASDAQ:ARLP) is well-suited to be a reliable energy partner for the future having a market capitalization of $2.8 billion as of last quarter of 2023 and one of the best coal mining stocks to invest in.
The company possesses royalties from oil and gas operations and has notable investments in emerging alternative energy ventures which makes it as one of the best coal stocks. According to the last quarter of 2023, Alliance Resource Partners, L.P. (NASDAQ: ARLP) had 6 hedge fund investors out of 933 funds tracked by Insider Monkey database. Adam Peterson’s Magnolia Capital Fund was the largest stakeholder with 3.2 million shares having net worth of $68.1 million.
10. Ramaco Resources, Inc. (NASDAQ:METC)
Number of Hedge Fund Holders: 14
Ramaco Resources, Inc. (NASDAQ:METC) is a US based coal mining company that specializes in mining, processing and selling of metallurgical coal primarily used in steel production. As of March 2024, Ramaco Resources, Inc. (NASDAQ:METC) intends to increase its met coal production by two folds from the current 3.5 million tons and delve into the rare earth business that makes it as one the best coal stocks.
According to Insider Monkey’s Q4 database of 2023, 14 hedge funds were bullish on Ramaco Resources, Inc. (NASDAQ: METC) with Steve Cohen’s Point72 Asset Management being the largest stakeholder of the company, with 901,500 shares worth $15.5 million.
Ramaco Resources, Inc. (NASDAQ:METC) is one of the best coal mining stocks to invest in as it leads the coking coal industry as of March 2024 and it has managed to secure an average rating of buy and a price target of $23.50, according to analysts of S&P Capital IQ. In an effort to reduce costs and improve operational efficiency, Ramaco Resources, Inc. (NASDAQ: METC) has purchased a coal preparation plant for the Maben Complex and expects the same plant to get operational by Q4 this year.
9. Hallador Energy Company (NASDAQ:HNRG)
Number of Hedge Fund Holders: 17
Hallador Energy Company (NASDAQ: HNRG) is the leader in energy exploration since 1951 that makes it as one of the best coal stocks. The company is headquartered in Terre Haute, Indiana and through its wholly owned subsidiary, Sunrise Coal, LLC, produces electricity at its 1GW facility at the Merom Generating Station.
As of February 2024, Hallador Energy Company (NASDAQ: HNRG) announced a restructuring of its sunrise coal division to transition from a coal production company to a vertically integrated independent power producer that will eventually enhance the overall cost structure.
The last quarter of 2023 as per Insider Monkey’s database indicated that Hallador Energy had 17 hedge fund holders and Israel Englander’s Millennium Management was the biggest position holder, with 322,570 shares worth $2.9 million of the firm.
Along with Alliance Resource Partners, L.P. (NASDAQ: ARLP) and Ramaco Resources, Inc. (NASDAQ: METC), Hallador Energy Company (NASDAQ: HNRG) is one of the best coal mining stocks to invest.
8. SunCoke Energy, Inc. (NYSE:SXC)
Number of Hedge Fund Holders: 19
SunCoke Energy, Inc. (NYSE: SXC) is an independent manufacturer of coke. The company was established in 1960 and is headquartered in Lisle, Illinois. It operates through three segments: Domestic Coke, Brazil Coke, and Logistics. Analysts who are looking for strong oil-energy stocks, it is prudent for them to seek those companies that are outperforming and as of March 2024, SunCoke Energy, Inc. (NYSE: SXC) has certainly gained attention of many investors and is one of the best coal stocks.
SunCoke Energy, Inc. (NYSE: SXC) had 19 hedge fund holders as per Insider Monkey’s fourth quarter database. And Cliff Asness’s AQR Capital Management is the largest stakeholder of the company with 592,500 shares worth $6.4 million. SunCoke Energy, Inc. (NYSE:SXC) had surpassed its own forecasts with a consolidated adjusted EBITDA of $268.8 million in Q4. And the company is planning ahead for a challenging year of 2024 with a strategic focus on safety, environmental performance, and expanding its customer base.
7. Alpha Metallurgical Resources, Inc. (NYSE:AMR)
Number of Hedge Fund Holders: 20
Alpha Metallurgical Resources, Inc. (NYSE: AMR) was formerly known as Contura Energy Inc. and is a leading coal producer in the United States headquartered in Bristol, Tennessee. The company specializes in mining, producing, blending, and selling metallurgical and steam coal. Its portfolio of mining operations consists of 15 underground mines, nine surface mines and eight coal preparation plants.
Insider Monkey’s Q4 database results show that Alpha Metallurgical Resources, Inc. (NYSE:AMR) held 20 hedge funds out of 933 funds with Mohnish Pabrai as the largest stakeholder with 394,313 shares valued at $133.6 million. Mohnish Pabrai acquired a significant portion of AMR i.e. 369,642 shares during the second quarter of 2023 and added another 12% in the third quarter. The company’s strong financial discipline, clear-cut business model and commitment to maximizing shareholder returns makes it as one of the best coal stocks.
Alpha Metallurgical Resources, Inc. (NYSE:AMR) is one of the best coal mining stocks to invest like Hallador Energy Company (NASDAQ:HNRG) and SunCoke Energy, Inc. (NYSE:SXC).
6. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 24
BHP Group Limited (NYE: BHP) is one of the largest diversified mining companies that is the major producer of commodities such as iron ore, copper, coal, petroleum, and nickel with a substantial presence in each sector. Its strong focus and commitment to sustainability and environmental stewardship makes it as one of the best coal stocks.
BHP Group Limited (NYSE: BHP) has a market capitalization of around $144 billion. It published a white paper that focuses on the company’s efforts to transition from fossil fuel and carbon-intensive to a world of low or zero-carbon emission resources. In 2016, BHP Group Limited (NYSE:BHP) is committed to achieving gender balance by 2025, and has achieved 40% female representation this year. It is one of the first mining companies in Chile to exceed 40% female representation.
BHP Group Limited (NYSE: BHP) positions itself as a promising, resilient investment choice and one of the best coal mining stocks to capitalize amidst changing market dynamics and regulatory pressures due to its diversified portfolio spanning various commodities, vigorous operational efficiency and proactive approach to sustainability and environmental stewardship.
Insider Monkey’s fourth quarter database results show that 24 hedge funds were bullish on BHP Group Limited (NYSE:BHP) with Ken Fisher’s Fisher Asset Management as the largest position holder in the company have 19.9 million shares worth $1.4 billion.
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Disclosure: None. 11 Best Coal Mining Stocks To Invest In is originally published on Insider Monkey.