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Investing in coal stocks

Stocks related to this fossil fuel critical to energy production have surged. Here's what you need to know before investing.

Updated

Oct 4, 2021

Fact checked

Global demand for coal is surging as the pandemic slowdown ebbs, and that has coal prices hitting new records. Numerous news reports this week tell of low stockpiles as prices rise. And that has stocks in the industry surging.

Shares of Arch Resources (ARCH), the second-largest coal supplier in the US, are up 25% in the last week and 123% year-to-date.
Peabody Energy (BTU), the largest supplier, saw shares jump 21% in the last week and 549% YTD.
Denver-based Hallador Energy (HNRG) was up 27% in the last week and 103% YTD.

And while other factors may be at work on some stocks in the sectors, these kinds of gains are common right now. Demand for coal is still expected to fall long-term amid concern over climate change and a shift to other fuels, right now the sector is hot.
Here are some basics for those considering an investment in coal.

What is coal?

Coal is a rock that’s predominantly made of carbon. Its combustible properties make it useful to burn for fuel and accounts for almost 40% of the world’s electricity generation.
Ten countries produce 90% of the world’s coal, with China, India and the United States leading the pack. Despite a growing climate change movement and calls for green energy, the coal demand is forecast to remain stable into 2024.
Coal stocks include companies that mine and process coal for electricity plants and steel production.

Why invest in coal stocks?

China consumed over 50% of the world’s coal production in 2018, according to the BP Statistical Review of World Energy. While the global coal demand should remain stable through 2024, China’s coal demand is predicted to peak in 2025.
High demand for this fossil fuel is likely to bump coal stock prices in the foreseeable future. So although coal won’t be the dominant energy source that it once was during the Industrial Revolution, it’s not going anywhere yet.

Risks of investing in coal

Coal stocks face three primary obstacles:

Government policies. When coal is burned for energy, it produces greenhouse gas emissions. Governments are adopting stronger climate policies to reduce air pollution by slowly phasing out coal power generation.
Competition. Renewable energy, including wind, solar power and natural gas, are slowly edging coal out of the market. For example, coal generation is forecast to drop by more than 5% every year through 2024 in Europe and the United States.
Developments in China. Being a coal consumer giant, China strongly influences coal demand. China anticipates consumption to peak in 2025, while the International Energy Agency thinks demand could plateau as soon as 2022. Either way, coal demand will steadily fall as China weans off of coal and implements its cleaner energy strategy.

Coal stocks

Many coal stocks trade on the New York Stock Exchange. But certain stocks, including China Shenhua Energy Co. Ltd., are only available over-the-counter or from an international exchange. See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.

Company summary
Warrior Met Coal, Inc. produces and exports non-thermal metallurgical coal for the steel industry. It operates two underground mines located in Alabama. The company sells its metallurgical coal to a customer base of blast furnace steel producers located primarily in Europe, South America, and Asia. It also sells natural gas, which is extracted as a byproduct from coal production. Warrior Met Coal, Inc. was incorporated in 2015 and is headquartered in Brookwood, Alabama.
Historical performance
Stock information
- Market capitalization: $2877165312
- P/E ratio: 6.4016
- PEG ratio: 0
- Dividend yield: 0.0051%
Get more detailed information and learn how to buy HCC.US stock
Company summary
Arch Resources, Inc. produces and sells metallurgical products. As of December 31, 2022, the company operated seven active mines. It also owned or controlled primarily through long-term leases approximately 28,292 acres of coal land in Ohio; 952 acres of coal land in Maryland; 10,095 acres of coal land in Virginia; 306,263 acres of coal land in West Virginia; 81,450 acres of coal land in Wyoming; 234,087 acres of coal land in Illinois; 33,047 acres of coal land in Kentucky; 362 acres of coal land in Montana; 248 acres of coal land in Pennsylvania; and 19,018 acres of coal land in Colorado, as well as smaller parcels of property in Alabama, Indiana, Washington, Arkansas, California, Utah, and Texas. The company sells its products to utility, industrial, and steel producers in the United States and internationally. Arch Resources, Inc. was incorporated in 1969 and is headquartered in St. Louis, Missouri.
Historical performance
Stock information
- Market capitalization: $3010242560
- P/E ratio: 3.9968
- PEG ratio: 0
- Dividend yield: 0.0476%
Get more detailed information and learn how to buy ARCH.US stock
Company summary
American Resources Corporation engages in the extraction, processing, transportation, distribution, and sale of metallurgical coal to the steel industries. The company supplies raw materials; and sells coal used in pulverized coal injections. It has a portfolio of operations located in the Pike, Knott, and Letcher Counties in Kentucky; and Wyoming County, West Virginia. The company was founded in 2006 and is headquartered in Fishers, Indiana.
Historical performance
Stock information
- Market capitalization: $137752208
- P/E ratio: 13.5385
- Dividend yield: 0%
Get more detailed information and learn how to buy AREC.US stock
Company summary
Ramaco Resources, Inc. operates, develops, and sells metallurgical coal. Its development portfolio includes the Elk Creek project located in southern West Virginia; the Berwind property situated on the border of West Virginia and Virginia; the Knox Creek property is located in Virginia; and the RAM Mine property situated in southwestern Pennsylvania. The company serves blast furnace steel mills and coke plants in the United States, as well as international metallurgical coal consumers. The company was founded in 2015 and is headquartered in Lexington, Kentucky.
Historical performance
Stock information
- Market capitalization: $889511296
- P/E ratio: 11.6395
- PEG ratio: 0
- Dividend yield: 0.0292%
Get more detailed information and learn how to buy METC.US stock
Company summary
SunCoke Energy, Inc. operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing based customers. In addition, it owns and operates cokemaking facilities in the United States and Brazil. The company was founded in 1960 and is headquartered in Lisle, Illinois.
Historical performance
Stock information
- Market capitalization: $765531712
- P/E ratio: 14.0615
- PEG ratio: -3.65
- Dividend yield: 0.0438%
Get more detailed information and learn how to buy SXC.US stock
Company summary
NACCO Industries, Inc., together with its subsidiaries, engages in the natural resources business. The company operates through three segments: Coal Mining, North American Mining, and Minerals Management. The Coal Mining segment operates surface coal mines under long-term contracts for power generation companies and an activated carbon producer in North Dakota, Texas, Mississippi, and Louisiana, as well as Navajo Nation in New Mexico. The North American Mining segment provides value-added contract mining and other services for producers of aggregates, activated carbon, lithium, and other industrial minerals; and contract mining services for independently owned mines and quarries in Florida, Texas, Arkansas, Indiana, Virginia, and Nebraska. The Minerals Management segment is involved in the leasing of its royalty and mineral interests to third-party exploration and production companies, and other mining companies, which grants them the rights to explore, develop, mine, produce, market, and sell gas, oil, and coal. NACCO Industries, Inc. was founded in 1913 and is headquartered in Cleveland, Ohio.
Historical performance
Stock information
- Market capitalization: $266894160
- P/E ratio: 14.8167
- PEG ratio: 0
- Dividend yield: 0.0245%
Get more detailed information and learn how to buy NC.US stock
Company summary
BHP Group Limited operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. The company operates through Copper, Iron Ore, and Coal segments. It engages in the mining of copper, silver, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and energy coal. The company is also involved in mining, smelting, and refining of nickel; and potash development activities. In addition, it provides towing, freight, marketing and trading, marketing support, finance, administrative, and other services. BHP Group Limited was founded in 1851 and is headquartered in Melbourne, Australia.
Historical performance
Stock information
- Market capitalization: $157021716480
- P/E ratio: 12.1827
- PEG ratio: 0
- Dividend yield: 0.0548%
Get more detailed information and learn how to buy BHP.US stock
Company summary
China Shenhua Energy Company Limited, together with its subsidiaries, engages in the production and sale of coal and power; railway, port, and shipping transportation; and coal-to-olefins businesses in the People's Republic of China and internationally. It operates through six segments: Coal, Power Generation, Railway, Port, Shipping, and Coal Chemical. The Coal segment produces coal from surface and underground mines; and sells coal to power plants and metallurgical and coal chemical producers. The Power segment generates electric power through thermal, wind, water, and gas; and sells electric power to power grid companies. The Railway segment provides railway transportation services. The Port segment offers loading, transportation, and storage services. The Shipping segment provides shipment transportation services. The Coal Chemical segment produces and sells methanol; and polyethylene and polypropylene, as well as other by-products. The company was incorporated in 2004 and is based in Beijing, the People's Republic of China. China Shenhua Energy Company Limited operates as a subsidiary of China Energy Investment Corporation Limited.
Historical performance
Stock information
- Market capitalization: $589825835008
- P/E ratio: 10.5254
- PEG ratio: 14.9436
- Dividend yield: 0.0821%

What ETFs track the coal category?

The only ETF tracking the coal industry shut down recently. So ETF investors can’t find a clean-cut coal play.

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You’ll need a brokerage account to purchase coal stocks. Take a look at a few popular brokers to find one that fits your investing goals.

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Bottom line

Coal stocks could be a solid short-term investing opportunity. Demand should steadily increase in the coming years, but keep your eye on renewable energy and natural gas that’s slowly inching toward a bigger piece of the energy pie.
To invest in coal, compare trading platforms to open a brokerage account.

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Kimberly Ellis

Kimberly Ellis is a personal finance writer at Finder, specializing in banking and financial literacy. After teaching in public and private schools, Kimberly zeroed in on personal financial education to help families and kids develop lifelong money skills. She hails from New York City, graduating summa cum laude from Queens College with a BA in elementary education and mathematics, as well as a New York State teaching certificate. She’s also an aspiring polyglot, always in a book and forever on the hunt for the perfect classic red lipstick.

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Investing in coal stocks

Stocks related to this fossil fuel critical to energy production have surged. Here's what you need to know before investing.

What is coal?

Why invest in coal stocks?

Risks of investing in coal

Coal stocks

Warrior Met Coal (HCC.US)

Arch Resources (ARCH.US)

American Resources Corp Class A (AREC.US)

Ramaco Resources (METC.US)

SunCoke Energy (SXC.US)

NACCO Industries (NC.US)

BHP Group (BHP.US)

China Shenhua Energy (601088.SHG)