15. Arch Resources, Inc. (NYSE:ARCH)
52 Week Range: $116.44 – $129.09
Current Share Price: $126.98
Number of Hedge Fund Holders: 38
Short interest rate: 5.18%
According to short sellers, Arch Resources, Inc. (NYSE:ARCH) is one of the best 52-week low stocks to buy now as a basic materials company engaged in the production and sales of metallurgical products. The company owns and controls long-term leases of coal land in Ohio.
The company has inked a $5 billion deal with Consol Energy to create North America’s largest coal mining company. The combined company should have an export capacity of 25 million tons annually across two terminals.
While there have been concerns about tight emissions regulations on the coal industry, Arch Resources, Inc. (NYSE:ARCH) should be able to export 67% of its pro forma value to fast-growing Asian markets, safeguarding its revenue base.
The company overcame logistical challenges in the second quarter by shipping a record 2 million tons of coking coal. It also achieved record production levels from its metallurgical segment. Ultimately, it posted a net income of $14.8 million, down from $77.4 million a year ago. Revenues totaled 4608 million from $757 million a year ago.
Arch Resources, Inc. (NYSE:ARCH) ‘s financial results were significantly impacted by the short-term closure of the Baltimore port, which serves as a crucial distribution center for Arch Resources. Moreover, the demand for metallurgical coal, essential for steel production, saw a price drop, adding to the challenges faced in the third quarter. However, Arch Resources assured that its production and cost goals for the year 2024 are still achievable.
Furthermore, the company achieved considerable milestones in lowering its debt, enhancing its liquidity, and buying back its own shares. It paid down an incremental $12.5 million debt, bringing its debt level to $133.3 million with a net positive cash position of $146 million.
The stock trades at a Price-to-earnings (P/E) ratio of 9.12, suggesting it might be undervalued relative to its earnings. Additionally, Arch Resources, Inc. (NYSE:ARCH) ‘s Price-to-book (P/B) ratio over the same timeframe is 1.6, indicating that the stock’s market value appears to align with its book value. The percentage of shares outstanding short as of the end of July stood at 5.18%
As of June 2024 end, 38 out of the 912 hedge funds surveyed by Insider Monkey had held a stake in the company. Arch Resources, Inc. (NYSE:ARCH)’s largest hedge fund shareholder is Mohnish Pabrai due to its $59.73 million stake.
Here is what Black Bear Value Partners said about Arch Resources, Inc. (NYSE:ARCH) in its Q2 2024 investor letter:
“Arch Resources, Inc. (NYSE:ARCH) and Warrior are 2 of the leading U.S. producers of high-quality metallurgical coal (“met coal”). This is the kind of coal used for steelmaking. ARCH also has a small thermal coal business that contributes ~20% of their earnings. Each company is independently a top 5 position meaning coal is a meaningful percentage of our assets.
Both companies are largely export driven producers. For example, Warrior exports 97% of their production. Both have a large cost advantage as they can ship to Europe and South America in ~2 weeks versus Australian competition of ~5 weeks.”
