We recently compiled a list of the 10 Best Coal Stocks to Invest in Right Now. In this article, we are going to take a look at where BHP Group Limited (NYSE:BHP) stands against the other coal stocks.
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).
An aerial view of a mining operation in action, with large trucks and yellow diggers.
BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Investors: 22
BHP Group Limited (NYSE:BHP) operates as a resources company with coal being one of the key segments. The primary operations of BHP are located in Australia, Europe, China, Japan, India, South Korea, the rest of Asia and North America.
While the overall business has been growing, energy coal production was down 4% y-o-y and steelmaking coal was lower by 23% in the latest quarter. This does not deter the annual guidance as the company expects coal production to be in the upper half of its guidance for 2025. The impact of unfavorable coal prices has been offset by higher shipments. A diversified business makes BHP a defensive investment in the commodity space. A more favorable coal pricing should enable BHP to generate better margins. It has already received a higher EBITDA revision for the year. A forward dividend yield close to 6% also offers a lucrative investment opportunity in this stock.
Overall BHP ranks 8th on our list of the best coal stocks to buy. While we acknowledge the potential of BHP as an investment, our conviction lies in the belief that 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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Disclosure: None. This article is originally published at Insider Monkey.