Warrior Met Coal, Inc. (HCC): A Bull Case Theory

We came across a bullish thesis on Warrior Met Coal, Inc. (HCC) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on HCC. Warrior Met Coal, Inc. (HCC)’s share was trading at $49.80 as of Feb 24^th. HCC’s trailing and forward P/E were 10.40 and 5.13 respectively according to Yahoo Finance.

Warrior Met Coal (HCC) recently sold off following its earnings report, despite its strong fundamentals and shareholder-aligned management. This reaction highlights the short-term nature of commodity markets, which are not forward-looking in the way equity markets typically are. While coking coal prices are currently depressed, macroeconomic tailwinds are forming—China is stimulating, India is growing at 7% annually, and Trump is back in office. These factors could support a significant rebound in coal demand over the next few years. Although prices are not at the generational lows seen in 2021, Warrior Met Coal remains a compelling investment, with the potential to double in value over the next two to three years.

Warrior recently released a presentation on its Blue Creek project, which underscores the company’s strong economics and disciplined approach to growth. The project is projected to deliver a staggering 35% IRR at $250 per short ton, reinforcing Warrior’s position as a premier low-cost producer. The company has only $150 million in long-term debt and operates three mines in the first quartile of the cost curve, ensuring resilience through commodity cycles. Unlike higher-cost producers that are vulnerable to downturns, Warrior’s financial discipline allows it to weather price fluctuations and emerge stronger.

For investors looking to navigate the volatility of commodity markets, the best approach is to buy low-cost producers with strong balance sheets. Warrior Met Coal fits this profile perfectly, offering stability while still providing substantial upside potential. If historical trends hold, shares purchased at $50 today could be worth $125 within a few years, presenting an attractive opportunity for investors willing to look beyond short-term price movements.

Warrior Met Coal, Inc. (HCC) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held HCC at the end of the third quarter which was 34 in the previous quarter. While we acknowledge the risk and potential of HCC as an investment, our conviction lies in the belief that some 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 HCC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.