The coal industry remains a major supplier to key industries such as steel and utilities with coal-fired electricity plants. Its dominance remains despite growing global awareness of climate change and moves to reduce the use of the coal, one of the world's most plentiful fossil fuels. Companies like Arch Coal Inc. (ARCH) and Teck Resources Ltd. (TECK) mine, process, and distribute coal for electricity generation. Over the 12-month trailing period, the industry as represented by the VanEck Vectors Coal ETF (KOL) has dramatically underperformed the market, with a total return of -55.6% as compared with a total return of -17.6% for the S&P 500. All figures are as of March 23, 2020.
Below, we'll examine the top three stocks in the coal industry for best value, fastest earnings growth, and most momentum.
Best Value Coal Stocks
Here are the coal stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Coal Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Alliance Resource Partners LP (ARLP)||3.88||0.5||1.3|
|Warrior Met Coal Inc. (HCC)||11.83||0.6||2.0|
|Arch Coal Inc. (ARCH)||33.27||0.5||2.5|
- Alliance Resource Partners LP: With facilities in Kentucky, Maryland, and Illinois, Alliance Resource Partners is a producer and marketer of coal to customers in the utilities and industrial sectors. In FY 2019, Alliance Resource Partners saw net income attributable to common stockholders increase by 8.9% year-over-year (YOY) to just under $400 million.
- Warrior Met Coal Inc.: Warrior Met Coal is a producer and exporter of metallurgical coal. Its primary client base includes blast furnace steel producers spread across Europe, South America, and Asia.
- Arch Coal Inc.: Arch Coal is a top producer of thermal and metallurgical coal from surface and underground mines. The company has mining locations across the U.S. Arch Coal recently announced that it had closed on a $54 million equipment financing facility tied to equipment in West Virginia.
Fastest Growing Coal Stocks
Here are the coal stocks in the S&P 500 with the highest year-over-year earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Notably, only two coal stocks are included in this list because all others were not profitable during the time frame represented.
|Fastest Growing Coal Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Yanzhou Coal Mining Co. Ltd. (YZCAY)||7.05||3.5||35.4|
|China Shenhua Energy Co. Ltd. (CSUAY)||6.71||33.3||1.2|
- Yanzhou Coal Mining Co. Ltd.: China-based Yanzhou Coal Mining produces a variety of coal products and is also involved in power generation, machinery manufacturing, and railway transport, among other services.
- China Shenhua Energy Co. Ltd.: China Shenhua Energy is the leading publicly listed coal company in China. The company and its subsidiaries are engaged mainly in the production and sale of coal and electricity, as well as railway, port and shipping transportation.
Coal Stocks with the Most Momentum
These are the coal stocks in the S&P 500 that had the greatest total return over the past 12 months. While the coal industry is down substantially during that period, these three companies have seen the least decline.
|Coal Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Price Change (%)|
|Yanzhou Coal Mining Co. Ltd. (YZCAY)||7.05||3.5||-12.5|
|China Shenhua Energy Co Ltd. (CSUAY)||6.71||33.3||-28.6|
|Warrior Met Coal Inc. (HCC)||11.83||0.6||-52.2|
|VanEck Vectors Coal ETF (KOL)||N/A||N/A||-55.6|
|S&P 500 (SPY)||N/A||N/A||-17.6|
- Yanzhou Coal Mining Co. Ltd.: See company description above.
- China Shenhua Energy Co. Ltd.: See company description above.
- Warrior Met Coal Inc.: See company description above.
YCharts. "Financial Data," Accessed March 23, 2020.
Alliance Resource Partners LP. "Alliance Resource Partners, L.P. Reports Annual Increases to Net Income and EBITDA; Declares Quarterly Cash Distribution of $0.40 Per Unit; and Provides Initial 2020 Guidance," Accessed March 23, 2020.
Arch Coal, Inc. "Arch Announces $54 Million Equipment Financing Facility," Accessed March 23, 2020.