5 Best Coal Stocks To Invest In

2. Arch Resources, Inc. (NYSE:ARCH)

Number of Hedge Fund Holders: 45

Arch Resources, Inc. (NYSE:ARCH) shares have gained 194.27% in the last 12 months as of June 8. The Missouri-based company deals in the mining and production of thermal and metallurgical coal across the United States, and exports it to steelmakers, utility and industrial users across Europe, Africa and Asia.

On April 27, B. Riley analyst Lucas Pipes raised the firm’s price target on Arch Resources, Inc. (NYSE:ARCH) to $234 from $231 and kept a ‘Buy’ rating on the company shares. The analyst holds that the company is well-positioned to make new records in its cash generation, given that it executed positively on strong met coal pricing despite ongoing rail-service headwinds.

45 hedge funds were stakeholders in Arch Resources, Inc. (NYSE:ARCH) at the end of the first quarter. This shows a positive trend from the preceding quarter where 40 hedge funds were long on the company shares.

In Q1 2022, Arch Resources, Inc. (NYSE:ARCH) posted an EPS of $13.02, exceeding analysts’ estimates by $1.34. Revenue of $867.94 million for the quarter also outperformed estimates by $142.6 million, and represented growth of 142.8% in comparison to the year-ago quarter.

Investment firm Nordstern Capital examined the market position and future prospects of Arch Resources, Inc. (NYSE:ARCH) in its Q1 2022 investor letter. It said:

 “Arch Resources (NYSE:ARCH) is a low-cost high-quality metallurgical (met) coal producer for the global steel industry. Coal might be among the most hated products in the world, due to its reputation for being a dirty climate killer. However, steelmaking requires coal, solar panels and wind turbines require steel. Our modern society relies on steel and modernizing countries such as China,
India, Indonesia therefore rely on coal.

Coal is an essential commodity, yet the industry was ‘left for dead’ by Wall Street, ESG-driven investment flows, politics, the public, and everyone else. This will probably continue to pose a wide moat for potential new entrants. Years of constrained supply and underinvestment now meet with global supply-chain issues, increased demand post-lockdowns, and inflationary pressures. In addition, the sanctions against Russia are crippling one of the big six producers, China is shifting away from Australia and Germany’s governing Green Party suddenly considers more coal. Demand up, supply down → price: moon.

Value investing veteran Bob Robotti argues in “revenge of the old economy” that US producers of physical goods are benefitting from sustained inflation. Inflation driven energy costs in China and Europe increase much faster than in the US. Hence, US energy-intensive industries such as steelmaking are at a relative advantage. A healthy US steel industry will bode well for US met coal producers such as Arch Resources…” (Click here to see the full text)