Top 5 Coal Stocks to Buy This Month

: CSUAY | China Shenhua Energy Company Limited News, Ratings, and Charts

CSUAY – In a rapidly evolving global energy landscape, coal maintains its position, showcasing resilience. Therefore, fundamentally strong coal stocks Yankuang Energy Group (YZCAY), SunCoke Energy (SXC), Warrior Met Coal (HCC), CONSOL Energy (CEIX), and China Shenhua Energy (CSUAY) might be ideal buys this month. Read more…

In a shifting energy landscape, coal remains resilient, evidenced by a 1.5% global consumption rise in the first half of this year. So, investors could consider buying top coal stocks Yankuang Energy Group Company Limited (YZCAY), SunCoke Energy, Inc. (SXC), Warrior Met Coal, Inc. (HCC), CONSOL Energy Inc. (CEIX), and China Shenhua Energy Company Limited (CSUAY) this month. These stocks also boast robust profit margins.

Historically, the surge in industrialization and economic growth, notably in emerging economies like Asia, has been a driving force behind the heightened demand for coal. This demand stems from coal’s role as a primary energy source, catering to both power generation and various industrial processes.

In the first half of 2023, global coal consumption increased by 1.5% to reach 4,665 gigatons. This growth is attributed to a 1% rise in electricity production and a 2% increase in other uses.

Despite shifts in the energy landscape, the International Energy Agency (IEA) anticipates that global demand for coal will remain high in 2024. The IEA predicts stable demand at around 8.38 Gt, a level not seen before 2022. The trend includes a decline in coal use for electricity (-1%), balanced by a 1.5% increase in other industrial uses, driven by improved economic conditions.

Additionally, the IEA anticipates a 10% increase in global investment in coal production and supply in 2023, reaching $150 billion. This growth is attributed to robust coal demand and high prices observed during the 2022 energy crisis.

Furthermore, the coal industry is propelled by its cost-effectiveness and logistical advantages. The global coal market is estimated to be worth $658.68 billion by 2027, expanding at a CAGR of 1.4%, as per Research and Markets report. The global coal market’s sustained resilience and ongoing expansion underscore its enduring significance within the broader energy landscape.

Considering these conducive trends, let’s look at the fundamentals of the five best stocks in the A-rated Coal industry, starting with number 5.

Stock #5: Yankuang Energy Group Company Limited (YZCAY)

Based in Zoucheng, the People’s Republic of China, YZCAY engages in coal mining, preparation, and sale worldwide. The company offers various types of coal for applications such as electric power, metallurgy, and the chemical industry. Additionally, it manufactures, installs, and sells mining equipment, machinery, and related products.

YZCAY’s trailing-12-month levered FCF margin of 18.32% is 215.2% higher than the industry average of 5.18%. Its trailing-12-month ROCE of 22.13% is higher than the 19.32% industry average.

YZCAY pays an annual dividend of $2.84, which translates to a dividend yield of 16.21% on the current share prices. Its four-year average yield is 16%. The company’s dividend payouts have grown at a CAGR of 73.4% over the past three years.

During the fiscal first quarter that ended March 31, 2023, YZCAY’s total operating revenue stood at RMB44.42 billion ($6.24 billion), up 7.8% year-over-year. Its net profit stood at RMB6.94 billion ($975.29 million). Its EPS stood at RMB1.15.

YZCAY’s total current assets, as of March 31, 2023, stood at RMB96.14 billion ($13.51 billion), compared to RMB88.74 billion ($12.47 billion) as of December 31, 2022.

For the fiscal year ending December 2023, YZCAY is expected to report a revenue of $24.56 billion.

The stock has returned 24% over the past three months to close its last trading session at $17.54.

YZCAY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.

YZCAY has a B grade for Value and Stability. Within the A-rated Coal industry, it is ranked #5 among ten stocks.

Click here to see YZCAY’s POWR Ratings for Growth, Momentum, Quality, and Sentiment.

Stock #4: SunCoke Energy, Inc. (SXC)

SXC is an autonomous Coke producer in the Americas and Brazil, structured into three segments: Domestic Coke; Brazil Coke; and Logistics. It supplies both metallurgical and thermal coal and offers handling and mixing services to diverse industrial clients, such as steel, coke, electric utility, and coal-producing sectors.

SXC’s trailing-12-month levered FCF margin of 8.35% is 103.3% higher than the industry average of 4.11%. Its trailing-12-month asset turnover ratio of 1.22x is 74.2% higher than the 0.70x industry average.

On September 1, SXC paid a cash dividend of $0.10 per share of the company’s common stock, representing a 25% increase over the regular quarterly cash dividend of $0.08 per share. SXC has raised its dividend payout at a CAGR of 14.5% over the past three years. With a four-year average dividend yield of 3.79, the company pays an annual dividend of $0.40, which translates to a yield of 4.51% on the prevailing price level.

During the fiscal third quarter that ended September 30, 2023, SXC’s sales and other operating revenue increased marginally year-over-year to $520.40 billion. Its operating income stood at $29.70 million. The company’s adjusted EBITDA amounted to $65.40 million. In addition, net income attributable to SXC came in at $7 million and $0.08 per share.

SXC’s revenue and EPS are expected to amount to $1.95 billion and $0.65 in the fiscal year 2023. The company surpassed the consensus revenue estimates in each of the trailing four quarters, which is notable.

Shares of SXC have soared 18.4% over the past six months to close the last trading session at $8.94.

SXC’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.

SXC has an A grade for Momentum and a B for Value. It is ranked #4 in the same industry.

To access the additional SXC ratings for Growth, Stability, Sentiment, and Quality, click here.

Stock #3: Warrior Met Coal, Inc. (HCC)

HCC produces and exports non-thermal metallurgical coal for the steel industry. It operates two underground mines located in Alabama.

HCC’s trailing-12-month EBITDA and net income margins of 40.46% and 27.11% are 130.8% and 354.9% higher than the industry averages of 17.54% and 5.96%, respectively.

On November 10, HCC paid stockholders a regular quarterly dividend of $0.07 per share. Its annual dividend rate of $0.28 per share translates to a 0.53% yield on the current price level. Its dividends grew at 11.9% CAGR over the past three years. Its four-year average dividend yield is 5.48%.

In the fiscal third quarter that ended September 30, 2023, HCC’s total revenues grew 8.5% year-over-year to $423.49 million. Its operating income stood at $107.75 million. Its adjusted EBITDA came at $145.78 million. The company’s adjusted net income and adjusted net income per share amounted to $96.59 million and $1.85, respectively.

Street expects HCC’s revenue and EPS for the fiscal fourth quarter ending December 2023 to increase 10.1% and 23.7% year-over-year to $379.61 million and $2.35, respectively.

Over the past year, HCC has gained 66.6%, closing the last trading session at $54.25. It has returned 16.2% over the past month.

It is no surprise that HCC has an overall rating of B, equating to Buy in our proprietary rating system.

HCC has an A grade for Momentum and a B for Sentiment and Quality. It has ranked #3 in the same industry.

Beyond what we have mentioned above, we have also rated HCC for Growth, Value, and Stability. Get all HCC ratings here.

Stock #2: CONSOL Energy Inc. (CEIX)

CEIX produces and exports bituminous coal. Its Pennsylvania Mining Complex segment mines, prepares, and markets this coal to power generators and industrial and metallurgical end-users. Meanwhile, the CONSOL Marine Terminal segment offers coal export terminal services via the Port of Baltimore.

CEIX’s trailing-12-month levered FCF and net income margins of 20.60% and 27.51% are 254.5% and 100.1% higher than the industry averages of 5.81% and 13.75%.

On October 31, CEIX announced that it had used its free cash flow to repurchase 976 thousand shares of common stock at an average price of $95.22 per share, amounting to $93 million during the third quarter ended September 30, 2023. This represents approximately 77% of the quarterly free cash flow. Year-to-date through October, CEIX has repurchased 4.10 million shares for $68.97, equivalent to nearly 12% of its public float as of year-end 2022.

In the fiscal third quarter that ended September 30, 2023, CEIX’s revenue and other income increased 1.5% year-over-year to $569.86 million. Its earnings before income tax stood at $121.76 million. In addition, the company’s net income and total earnings per share stood at $100.73 million and $3.11, respectively.

In the nine months that ended September 30, 2023, its net cash provided by operating activities increased 27.8% year-over-year to $638.82 million. Moreover, as of September 30, 2023, its total long-term debt came at $188.83 million, compared to $355.34 million as of December 31, 2022.

Analysts expect CEIX’s EPS to rise 30.6% year-over-year to $5.07 in the fiscal fourth quarter ending December 2023. Its revenue in the same quarter is likely to be $627.70 million. The company surpassed consensus revenue and EPS estimates in three of the trailing four quarters.

CEIX’s shares have gained 48.1% year-to-date and 87.9% over the past nine months to close the last trading session at $101.35.

CEIX’s positive fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system.

CEIX has an A grade for Quality and Momentum and a B for Growth and Value. It has ranked #2 within the same industry.

In addition to the POWR Ratings just highlighted, one can see CEIX’s ratings for Stability and Sentiment here.

Stock #1: China Shenhua Energy Company Limited (CSUAY)

Headquartered in Beijing, China, CSUAY is involved in coal and power production and sales, as well as railway, port, and shipping transportation, alongside coal-to-olefins ventures. The company operates through six segments: Coal; Power Generation; Railway; Port; Shipping; and Coal Chemical.

CSUAY’s trailing-12-month levered FCF margin of 11.68% is 100.9% higher than the industry average of 5.81%. Its trailing-12-month net income margin of 18.07% is 31.4% higher than the 13.75% industry average.

During the nine months that ended September 30, 2023, CSUAY’s revenue rose marginally year-over-year to RMB252.47 billion ($35.48 billion). Its gross profit amounted to RMB80.29 billion ($11.28 billion). The company reported a total comprehensive income for the period of RMB61.63 billion ($8.66 billion) and EPS of RMB2.642.

The company’s revenue for the fiscal fourth quarter ending December 2023 is expected to amount to $12.78 billion.

The stock gained 11.3% year-to-date, closing the last trading session at $12.79.

CSUAY’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

CSUAY has an A grade for Momentum and Stability and a B for Quality. It is ranked first in the same industry.

Access additional CSUAY ratings for Value, Growth, and Sentiment here.

What To Do Next?

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CSUAY shares were unchanged in premarket trading Wednesday. Year-to-date, CSUAY has gained 23.69%, versus a 19.84% rise in the benchmark S&P 500 index during the same period.


About the Author: Kritika Sarmah


Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CSUAYGet RatingGet RatingGet Rating
YZCAYGet RatingGet RatingGet Rating
CEIXGet RatingGet RatingGet Rating
HCCGet RatingGet RatingGet Rating
SXCGet RatingGet RatingGet Rating

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