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 Peabody Energy Corporation (NYSE:BTU) 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).
A coal miner in a thick protective suit and helmet drilling for coal under bright lights.
Peabody Energy Corporation (NYSE:BTU)
Number of Hedge Fund Investors: 25
Peabody Energy Corporation (NYSE:BTU) operates as a coal mining business in the United States, Australia, Europe and Asia. It is involved in the mining, preparation, and sale of thermal coal primarily to electric utilities, industrial facilities and steel manufacturers.
With a P/E of 4.8, it is certainly an undervalued stock for a company looking to expand its coal assets globally. In a recent development, BTU made its first shipment from Centurion Mine in Queensland’s Bowen Basin. The newly acquired mine has an expected life of 25 years and offers premium hard coking coal used in making original steel. BTU has also agreed to acquire four Tier 1 steel mines from Anglo American that would enable it to venture into metallurgical coal. Even with coal pricing being unfavorable BTU beat revenue estimates in Q3 with a positive earnings surprise of 26.50%.
Overall BTU ranks 6th on our list of the best coal stocks to buy. While we acknowledge the potential of BTU 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 BTU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
