Australian thermal coal at Newcastle Port, the benchmark for the vast Asian market, has more than doubled this year to about $180 a metric ton, driven by surging demand from utilities and plunging stockpiles. According to Goldman Sachs (GS), coal prices are expected to average…
$190 from October to December. Moreover, in Europe, coal prices have risen to $169, up from $65 in mid-March. In addition, with China’s bulk of electricity still being generated by coal, growing demand from the power sector should further drive the prices higher.
According to the Energy Information Administration, in the U.S., the share of electricity generation from coal is expected to rise from 20% in 2020 to about 24% in both 2021 and 2022 due to increased natural gas prices.
Therefore, fundamentally sound small-cap coal stocks Warrior Met Coal, Inc. (HCC – Get Rating), SunCoke Energy, Inc. (SXC – Get Rating), and Ramaco Resources, Inc. (METC – Get Rating) could benefit significantly from the rising coal prices and deliver solid returns in the near term.
HCC is a producer and exporter of metallurgical coal for the global steel industry, operating two underground mines located in Alabama. The company serves markets in the U.S., Europe, Asia, and South America. In addition, it has the operational capacity to mine about eight million tons of coal per year. HCC has a market capitalization of $1.2 billion.
HCC’s sales increased 41.3% year-over-year to $224.76 million for the second quarter ended June 30, 2021. Its total revenues grew 38.9% from the year-ago value to $227.44 million. The company’s operating loss declined 46.9% from the prior-year quarter to $2.83 million. Also, its net loss reduced 48.9% year-over-year to $4.68 million.
Analysts expect HCC’s revenue for the fiscal year 2022 to be $1.15 billion, representing a 32.7% growth year-over-year. Also, its EPS is expected to grow 273.5% in the current year and 209.5% next quarter. Its stock price has increased 38.4% over the past six months.
HCC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an A grade for Momentum, and a B for Growth. We’ve also graded HCC for Sentiment, Stability, Value, and Quality. Click here to access all of HCC’s ratings. HCC is ranked #4 of 10 stocks in the B-rated Coal industry.
With a market capitalization of $521.47 million, SXC is a raw material processing and handling company. It serves steel and power customers, with principal business in cokemaking and logistics. The company operates through three segments: Domestic Coke; Brazil Coke; and Logistics. Additionally, SXC owns and operates five cokemaking facilities in the United States and one in Brazil.
In June, SXC priced its offering of $500 million aggregate principal amount of senior secured notes due 2029. The company intends to use the net proceeds from the offering for…
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