A rundown of the coal stocks with the most potential for profits this new year.
Whereas countless industries suffered during the pandemic, coal stocks were surprisingly the big winners by the end of 2021. Overall, the industry that’s perceived to be dying has actually grown by 6% in the past 12 months.
One of the most interesting developments to happen last year with regard to coal is the jump of thermal coals price in Asia, reaching a record $244 per metric ton, the second-highest ever and only a handful of dollars below a peak in October 2022. The coal that’s used in steelmaking — called metallurgy or coking — is also trading at a record high, changing hands above $400 per ton.
Whether you love it or believe the world would be a better place without it, there’s no denying that coal is still quite the strong commodity in the market. With coal still answering for almost 40% of the world's energy demands, it’s pretty much the ideal stock to invest in if you’re looking for guaranteed returns.
The Top Coal Stocks to Watch or Buy This Year
For you to make the most informed decisions when it comes to coal stocks, here’s a list of 7 coal stocks with the potential to offer high returns in 2023:
1. The BHP Group, LTD (ASX: BHP)
Market Cap: $237.21 Billion
We can’t really talk about coal stocks without talking about its largest producer. The BHP Group is an Australian company founded in 1851 with operations in more than 10 countries. Apart from coal, The BHP Group is also a major producer of iron ore, petroleum, copper, natural gas, nickel, and uranium.
Its diverse portfolio and long history are the main attractions for the stocks of this company. Being around for more than 150 years means that the company is constantly well-managed and always prepared to adapt to changing times.
A signifier of this is their recent announcement of plans to exit the oil and gas industry by merging with Woodside Petroleum, Australia’s largest independent gas producer. It also announced that it would be delisting itself from the London Stock Exchange and consolidating on the Australian Securities Exchange. As of January 2022, the company moved its main stock listing to the Australian Securities Exchange.
Before this transition is complete, though, investors can still enjoy the profits the company will undoubtedly receive thanks to the rise in coal demands. Over the past 5 years, the shares of BHP Group have gained by 62.91%.
2. Teck Resources (NYSE: TECK)
Market Cap: $16.39 Billion
Teck Resources is a multinational mining company with operations in Canada, Peru, Chile, and the USA. Apart from coal, they also produce copper, oil sands, and, of course, zinc – of which it is known as the world’s leading producer. The company also has the distinction of being one of the largest exporters of seaborne metallurgical coal.
Teck Resources had a wonderful 2021, reporting revenues of increases of 73% in the 3rd quarter. Part of its success is attributed to the favorable price environment for steelmaking coal. This combined with solid operational performance resulted in record adjusted profit which seems likely to spill over into 2022, even as the company plans to cut back on coal production and double its copper output by 2023.
Another great reason to invest in Teck Resources is their offering of a 0.56% dividend yield, a nice little touch for income investors.
3. Arch Resources (NYSE: ARCH)
Market Cap: $1.50 Billion
Formed in the late 1960s, Arch Resources has come to own over 30 mines across North America and is known to be the second-largest producer of coal in the United States. Over the past decade, the company has suffered through several crises, including bankruptcy and the recent pandemic. Despite these setbacks though, hope is in the air as the company seems to be in an upwards swing.
Over the past 12 months alone, the company’s shares have gained by 100.59%, placing share prices around the same levels they were at pre-pandemic. With proactive efforts from the company’s management and strong output from its many mines, the stocks of Arch Resources should definitely be on the radar for investors looking for a rising underdog.
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4. Warrior Met Coal (NYSE: HCC)
Market Cap: $1.35 Billion
Another coal mining company that caters mostly to the steel-manufacturing industry, Warrior Met Coal, was formed in 2015 after a take-over of assets from Walter Energy which went bankrupt. The company ships its coal all over the world and operates in the Americas, Europe, and Asia.
The early years of the Warrior Met Coal were wrought with many difficulties as it tried to find its footing amidst worker strikes and the pandemic. Although the disputes with laborers are ongoing, many investors believe the company will experience great growth once the issues are resolved. This means buying their stocks now, while their low exposes you to the growth and profits it could receive later on.
Share prices are currently trading on the low side, but a more long-term view of the company shows price gains of 14.69% over the past 12 months and 46.17% over the past 5 years. Warrior Met Coal also offers a hefty dividend yield of 0.76%.
5. Consol Energy (NYSE: CEIX)
Market Cap: $732.36 Million
Consol Energy is distinguished among the other entries on this list as being the largest underground miners of coal in the United States. With a history going back almost 160 years, stability remains a hallmark of this company, despite only existing in its current form since 2017.
Despite having a difficult time posting profits from 2019 to 2020, the increase in coal prices combined with a higher production output meant that Consol Energy reported revenues in 2023 that’s 10-time higher than the previous year. Though there’s still a lot for investors to be apprehensive about, Consol Energy’s management is making all the right moves to put the company on track to sustained profitability.
Over the past 12 months, the stocks of this company have gained by 141.64%. With plans to increase shipment abroad, and the possibility of Consol Energy’s coal to be used in power plants within the United States, the stocks of this company might become even more attractive going into 2022.
6. NACCO Industries (NYSE: NC)
Market Cap: $218.30 Million
Where all the other companies on this list are mining companies, NACCO Industries is actually a holding company with interests in a large network of businesses within the energy sector. In recent years, the company has streamlined its business to be more focused on mining, coal is one of the main drivers of growth.
Though stock performance has consistently been high, with 2019 being its best year ever, the current stock prices have gone much lower due to the pandemic and the resulting logistical issues. There is home for a coming resurgence though, with stock prices gaining by 24% over the past year.
Investment into NACCO Industries is essentially a safe way to gain exposure to the coal industry without investing in it directly. Buying their stocks now is a bet on the future growth of the company as the pandemic wears off.
Shareholders are also frequently rewarded by its generous 2.60% dividend yield, the highest of any dividend yield on this list. For many income investors, this is reason enough to buy at least a few shares of NACCO Industries.
7. American Resources (NASDAQ: AREC)
Market Cap: $105.56 Million
Working across the entire coal lifecycle, from mining to selling and transportation, American Resources is a US-based company that produces coal for steelmaking customers all around the globe.
Of all the companies on this list, this company has yet to hit its stride. Since it's going public in 2015, the prices of American Resources’ stocks have rarely gained about $18 and have even been traded 80% lower than their original price.
The tides though seem to be changing as the company buyout competitor after competitor and ramps up its production line. It has also poured money into new technologies in an effort to identify other minerals and environmentally-friendly energy sources. Although it's not the safest stock to invest in, there’s a lot of potential there for investors to work with.
Bottom Line…
And those were the top 7 coal stocks to look out for this 2022. Although nothing is certain where the stock market is concerned, the hike in coal prices and the continued growth of the industry overall is giving off some good omens that competitive investors simply cannot ignore.
That being said, practice your due diligence before making any investments. Research and expert advice are indispensable when you’re dealing with the stock market. Fluctuations in stock prices and unforeseen events can derail even the most well-plotted plans. Keeping this in mind will already put you miles ahead of most traders operating today.
With that, we certainly hope that this article was beneficial. Armed with the right information, and a little good luck, there’s a high chance that buying coal stocks might prove to be your greatest investment yet.