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, 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.
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.