Alliance Resource Partners (NASDAQ:ARLP) is one of the largest U.S. coal producers, with $2.3 billion in forecast revenue for 2022 and also profits of $3.78 per share. Its clients are mostly U.S. utilities that generate electricity.
Based in Tulsa, OK, it operates seven underground coal mines in six states in the mid-west and mid-Atlantic. It has 547.1 million tons of coal mineral reserves, and 1.17 billion tons of measured, indicated, and inferred coal minerals.
Arch Resources (NYSE:ARCH) makes thermal and metallurgical coal from surface and underground mines. Investors in the stock are especially interested in it, as it trades for under 2x earnings forecast for this year, according to Seeking Alpha.
Moreover, one analyst in Seeking Alpha points out that ARCH stock trades at just 2x free cash flow. He says that coal prices are forecast to stay very high. That could make it cheap for next year as well.
The reason for the jump in earnings is that the company made losses in trying to hedge coal prices. If it stops those losses (by not hedging) its underlying positive earnings and free cash flow (FCF) will come through.
Peabody Energy (NYSE:BTU) is another very large U.S. coal company with operations in a number of countries, including Japan, Taiwan, Australia, India, Indonesia, China, Vietnam and South Korea.
The stock is very cheap, trading at just 2.2x forecast earnings this year. If coal prices stay elevated, as they are now, the underlying positive earnings and free cash flow (FCF) will likely push the stock higher.
One analyst projects that the company will generate $1.7 billion in free cash flow (FCF) this year. That puts its valuation, at $2.7 billion at just 1.6x its FCF, or an FCF yield of 62.9%. That is incredibly high. Most attractive value stocks might have an FCF yield of no more than 8% to 10%.
Warrior Met Coal (NYSE:HCC) is an Alabama-based metalurgical-coal (i.e., the coal is used to make steel) producer that has two highly productive mines in Alabama. Its production capacity is more than 7 million metric tons of coal.
Moreover, the dividend, at 26 cents per share, gives the stock a dividend yield of 2.5%. That is very cheap for a company that has the ability to more than double the dividend if earnings continue to be as strong as they have been. That makes this one of the best coal stocks on this list as well.
However, despite these drawbacks, it continues to be relied upon by the developing world for energy needs. Coal is also cheaper, and is available in vast amounts. These two factors make it quite attractive if carbon emissions limits are not imposed. In fact, due to the severity of the ongoing energy crisis, even the United Kingdom was forced to keep its coal power plants open this year, after the British government announced that it was looking into keeping coal power plants open to meet the island's energy needs for the winter months for two gigawatts of backup power supply.
These factors have ensured that the global coal market continues to grow. According to research firm The Business Research Company, this market was worth $595 billion in 2021 and it will grow to $618 billion by the end of this year through a compounded annual growth rate (CAGR) of 3.9%. From the end of this year to 2026, the research firm expects the sector to grow at a CAGR of 3.7% and sit at $715 billion by the end of the forecast period. Like other industries, coal companies are also starting to rely heavily on technology, as they have started to use three dimensional visualization, among other technology, to gain a better picture of their mines, which then lets them improve productivity.
The largest coal producer is Asia Pacific, and as you will find out when you scroll through today's list, some of the largest companies in our collection are Chinese and Asian firms. Overall, the global coal market is worth a massive $1.5 trillion right now, and it will grow at a CAGR of 8.6 % between 2022 and 2027 to be worth $2.3 trillion. This places its value right alongside crude oil, which is estimated to be worth $1.5 trillion in 2026.
Today's list will focus on the top coal companies right now, with some of them being CONSOL Energy Inc. (NYSE:CEIX), China Shenhua Energy Company Limited (OTCMKTS:CSUAY), and Alliance Resource Partners, L.P. (NASDAQ:ARLP).
We dug through the coal industry to identify the relevant players. Following this, some of their financial metrics and other factors were studied. The companies are ranked through their price to earnings (P/E) ratio, which is crucial since healthy earnings are important in an industry with heavy operating costs. Hedge fund investments courtesy of Insider Monkey's Q3 2022 survey covering 920 funds is also provided.
Peabody Energy Corporation (NYSE:BTU) is an American coal mining company that has operations in the U.S., Taiwan, Australia, India, and several other countries. Cumulatively, it has 17 mines and roughly 2.5 billion tons of proven and provable coal reserves. The firm is headquartered in St. Louis, Missouri, the United States.
Peabody Energy Corporation (NYSE:BTU) owns the largest coal mine in the world. This mine is located in Wyoming, and it enables the company to produce a whopping 88.4 million tons of coal from its River Basin operations. The company has also grown its year to date operating income by 3x annually, with the latest reading sitting at $1.3 billion. Peabody Energy Corporation (NYSE:BTU) also has a fortress balance sheet in the form of $485 million of excess cash over debt.
Along with China Shenhua Energy Company Limited (OTCMKTS:CSUAY), CONSOL Energy Inc. (NYSE:CEIX), and Alliance Resource Partners, L.P. (NASDAQ:ARLP), Peabody Energy Corporation (NYSE:BTU) is one of the largest coal companies in the world.
Yankuang Energy Group Company Limited (OTCMKTS:YZCHF) is a Chinese company that was set up in 1973 and is headquartered in Zoucheng, the People's Republic of China. The firm sells thermal, PCI, and coking coal to a variety of industries such as the energy and chemicals sector.
Yankuang Energy Group Company Limited (OTCMKTS:YZCHF) is the fourth largest state owned enterprise in China - a fact that shows the importance of coal in the modern day Chinese economy. Additionally, for the first half of this year, the company's net profit nearly tripled from 2021's first half. However, the third quarter was not so favorable, as Yankuang Energy Group Company Limited (OTCMKTS:YZCHF)'s net profit dropped by 14% annually. This was not due to any operational or other weakness; instead, it came as Australian coal consumption slowed down.
Natural Resource Partners L.P. (NYSE:NRP) is an American company that is headquartered in Houston, Texas. It mines for several resources such as coal, soda ash, and trona. All of the firm's mining assets are located in the U.S., with the coal reserves being present in Appalachia and the Illinois Basin.
Natural Resource Partners L.P. (NYSE:NRP) had $666 million worth of coal properties by the end of September 2022. The firm also grew its revenue to $190 million during its third fiscal quarter, for a $55 million growth. Additionally, Natural Resource Partners L.P. (NYSE:NRP) drives the bulk of its sales from coal, with the latest figures showing that $248 million out of its $291 million in operating revenue came through it.
Exxaro Resources Limited (OTCMKTS:EXXAF) is a South African company that operates in Europe, South Africa, Australia, and Asia. The firm produces thermal, metallurgical, and soft coking coal. It is headquartered in Centurion, South Africa.
Exxaro Resources Limited (OTCMKTS:EXXAF)'s second quarter saw the firm marginally grow its production by 1%, but at the same time, it kept its costs well below the mining industry average inflation of 11.6%. The firm's core operating income grew by 67% during the first half of this year, and its headline earnings per share of ZAR34.26 for H1 2022 were 75% higher. Exxaro Resources Limited (OTCMKTS:EXXAF) also aims to grow its coal exports by 24% to 3.1 million tons by improving logistics.
Whitehaven Coal Limited (OTCMKTS:WHITF) is an Australian company that operates coal mines in New South Wales and Queensland. The firm has four mines in total and it also exports its products to Japan, India, Malaysia, Taiwan, and other countries. It is headquartered in Sydney, Australia.
Whitehaven Coal Limited (OTCMKTS:WHITF)'s fiscal year 2022 results were the strongest in its history, as the firm reported AUD$3.1 billion - a new record. At the same time, it delivered AUD$1.95 billion in net profit, as it leveraged a strong pricing power to offset industry wide mining inflationary headwinds. Whitehaven Coal Limited (OTCMKTS:WHITF) also had a fortress of a balance sheet by the end of its fiscal year, with its net cash position growing to AUD$1 billion, over the previous year's net debt of AUD$800 million. It aims to sell 17.5 - 18.5 million tons of coal during the current fiscal year, and produce between 20 million tons and 22 million tons.
CONSOL Energy Inc. (NYSE:CEIX), China Shenhua Energy Company Limited (OTCMKTS:CSUAY), and Alliance Resource Partners, L.P. (NASDAQ:ARLP) join Whitehaven Coal Limited (OTCMKTS:WHITF) in our list of top coal stocks.
Since the beginning of industrialization, coal has been one of the leading energy sources in the world. In the recent years, the global production of coal has been steadily increasing and reached nearly 168 exajoules in 2019, according to Statista. Although developed countries have been pushing for more renewable energy sources for power generation, at least 38% of the electricity generated in the world is still produced by coal. The top producers of coal in the world include China, India, US, Australia, and Indonesia. One of the global leaders of coal mining in the US is Arch Resources Inc (NYSE: ARCH). Among the strongholds of U.S. coal mining are the Appalachian states West Virginia, Kentucky, and Pennsylvania, as well as Wyoming in the