Stocks of companies involved in the mining of coal are known as coal stocks. A large number of companies across the globe extract coal from the earth, which is used to generate electricity.
Despite the awareness about global warming and greenhouse gas emissions and the increase in things like electric cars and clean energy, the demand and consumption of coal have increased steadily. It is because a lot of countries still lack the resources to use other sources of power generation and still rely on coal as the major source of energy.
Therefore, although the performance of coal stocks has declined over the past few years, coal remains the top source of energy in the world, and coal stocks remain a good part of the investment portfolios.
|ARCH||Arch Coal, Inc.||$94.20||162.76%||1.4B|
|HCC||Warrior Met Coal, Inc.||$24.43||71.44%||1.3B|
|CEIX||Consol Energy, Inc.||$28.30||593.63%||975.8M|
|TECK||Teck Resources Ltd||$28.11||128.91%||15.0B|
|SXC||SunCoke Energy, Inc.||$6.92||96.59%||573.8M|
|RIO||Rio Tinto Group||$64.56||16.49%||76.4B|
|BTU||Peabody Energy Corporation||$12.58||882.81%||1.6B|
|ARLP||Alliance Resource Partners LP||$12.20||280.06%||1.6B|
|CCTC||Clean Coal Technologies||$0.01||0.00%||1.2M|
|NRP||Natural Resource Partners, LP||$29.20||135.86%||360.7M|
|CCR||CONSOL Coal Resources LP||$0.06||-25.00%||3.1M|
|CMP||Compass Minerals International, Inc.||$66.55||12.66%||2.3B|
|HL||Hecla Mining Company||$6.03||30.24%||3.2B|
|MLM||Martin Marietta Materials, Inc.||$393.26||58.93%||24.5B|
|MDU||MDU Resources Group, Inc.||$30.92||34.32%||6.3B|
|SUM||Summit Materials, Inc.||$35.68||120.25%||4.2B|
|SLCA||U.S. Silica Holdings, Inc.||$10.71||318.36%||800.6M|
|VMC||Vulcan Materials Company||$190.14||38.30%||25.2B|
State of the Coal Industry
The coal industry has a long and colorful history. Coal is believed to have been used as early as 3,000 B.C., and from that time until now coal has played a role in every civilization, giving rise to industrialization through its use by blacksmiths and the development of locomotive engines. Today it may seem coal’s glory days are behind it. However, this isn’t necessarily true for the Asia-Pacific region, which could see increases in coal exports due to major economic growth from China and India.
China is the largest consumer of coal, producing four times more than the next country on the list – the US – at over 2 billion tons per year (b/tpa) during 2012. According to data collected by Platts Coal Marketing , China shipped 7.86 million tonnes of coal in May alone.
This export capability comes at a cost; according to the International Energy Agency, over 40 percent of China’s energy consumption goes directly to its citizens, with the rest used for industrial purposes, such as power plants and manufacturing. A report by HSBC also indicated that 80% of China’s coal is consumed within its borders. Therefore it makes sense that China would want to export most or all of its coal production if it were able to do so.
The United States is also dependent on coal. Even though the United States is switching to more environmentally friendly energy sources like solar and nuclear, the country still uses coal energy.
Coal is used for a lot of things in The United States. In 2012, coal was used to produce 38% of the country’s electricity. Nuclear was second at 20%, and hydropower accounted for 6%. This leaves less than 7% ‘other renewables’, like wind power, solar, geothermal, biomass, etc. on which to rely for energy production.
Coal is used to power the railroads, ships, and trucks that transport goods across the country. It is also used to make fertilizer, chemicals, and glass. So coal is an important part of our energy infrastructure.
Factors to Consider Before Investing in Coal Stocks
Investors must consider the possible benefits and risks of investing in coal before investing in coal stocks. Coal remains an abundant and inexpensive source of energy, yet it causes severe effects on the health and environment. Therefore, investors must pay heed to the government regulations limiting the use of coal and thus impacting the prices of coal stocks.
Moreover, investors must also consider the individual strengths of companies before investing in them. The analysis should take into account the operational capacity, costs of production, gross profit margins, earnings and revenue growth, and dividend yields. In addition to the financial parameters, the environment-friendly initiatives by the companies should also be considered to evaluate the sustainability of coal companies and coal stocks.
Which Coal Stocks Should I Buy?
Coal is mined in many countries, and many of the coal companies are listed on the US stock exchanges. We have aggregated a list of the best coal stocks for investors to choose from. The selection largely depends on the market capitalization of the companies and the performance of stocks in terms of annual rates of return.
Investors should also take their own investment goals into account to decide which coal stocks to buy. The selection should depend on the companies’ balance sheet health, growth potential, business model efficiency, and return of value to the shareholders.