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 SunCoke Energy Inc. (NYSE:SXC) 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 emerging from a vast underground mining operation, his clothes blackened from the day’s work.
SunCoke Energy Inc. (NYSE:SXC)
Number of Hedge Fund Investors: 24
SunCoke Energy Inc. (NYSE:SXC) is an independent producer of metallurgical and thermal coal in the Americas and Brazil. It also operates coke-making facilities in the United States and Brazil. SXC has entered into a 3-year agreement to manage coal assets at Kanawha River Terminal In another development, it managed to bag a deal with US Steel to supply coke through June 2025.
The third quarter performance has been terrific with net income jumping four folds y-o-y from $8.5 million to $33.3 million in Q3-24. The full-year EBITDA guidance has been revised upward from $240-255 million to $260-70 million primarily due to an improved performance in its Logistics business. Operating cash flows continue to grow with SXC offering a generous dividend opportunity. The stock currently trades close to 10x its trailing 12-month EPS. Given the potential growth, the valuation appears to be attractive at its current price level.
Overall SXC ranks 7th on our list of the best coal stocks to buy. While we acknowledge the potential of SXC 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 SXC 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.
