Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Coal industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Coal Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Coal Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Coal industry for Friday, April 26, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Coal industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Hallador Energy Co’s Value Grade

Value Grade:

Hallador Energy Company is an energy company operating in the state of Indiana. The Company's segments include Coal Operations (operated by Sunrise Coal, LLC) and Electric Operations (operated by Hallador Power Company, LLC). The Coal Operations segment includes the operating mining complexes Oaktown 1 and 2 underground mines, Prosperity surface mine, Freelandville surface mine, and Carlisle wash plant. The Electric Operations segment includes the electric power generation facilities of the Merom Power Plant. The Oaktown Mining Complex is a coal mining and processing operation located in Knox and Sullivan counties, Indiana, and Crawford and Lawrence counties, Illinois. The Oaktown Mining Complex operations consist of two active underground mines, Oaktown Fuels No. 1 Mine and Oaktown Fuels No. 2 Mine, and related infrastructure. The Company holds other recoverable coal reserves in the Illinois Basin (ILB). Its subsidiaries include Sunrise Energy, LLC, Sycamore Coal, Inc., and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Hallador Energy Co has a Value Score of 96, which is considered to be undervalued.

When you look at Hallador Energy Co’s price-to-sales ratio at 0.25 compared to the industry median at 0.99, this company has a lower price relative to revenue compared to its peers. This could make Hallador Energy Co’s stock more attractive for value investors.

Hallador Energy Co’s price-earnings ratio is 3.95 compared to the industry median at 4.89. This means it has a lower share price relative to earnings compared to its peers. This could make Hallador Energy Co more attractive for value investors.

Now, let’s assess Hallador Energy Co’s EV/EBITDA ratio, also known as enterprise multiple. At 3.1, when compared to the industry median of 3.2, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Hallador Energy Co’s shareholder yield is lower than its industry median ratio of 5.60%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Hallador Energy Co’s price-to-book ratio is lower than its industry median ratio of 1.31. This could make Hallador Energy Co more attractive to investors looking for a new addition to their portfolio.

Natural Resource Partners LP’s Value Grade

Value Grade:

Natural Resource Partners L.P. is a diversified natural resource company. It owns, manages, and leases a diversified portfolio of properties in the United States including coal, industrial minerals and other natural resources, as well as rights to conduct carbon sequestration and renewable energy activities. Its Mineral Rights segment consists of about 13 million acres of mineral interests and other subsurface rights across the United States. Its ownership provides critical inputs for the manufacturing of steel, electricity, and basic building materials, as well as opportunities for carbon sequestration and renewable energy. Its Soda Ash segment consists of its 49% non-controlling equity interest in Sisecam Wyoming LLC (Sisecam Wyoming), a trona ore mining and soda ash production business located in the Green River Basin of Wyoming. Sisecam Wyoming mines trona and processes it into soda ash that is sold both domestically and internationally into the glass and chemicals industries.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Natural Resource Partners LP has a Value Score of 77, which is considered to be undervalued.

Natural Resource Partners LP’s price-earnings ratio is 6.8 compared to the industry median at 4.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Natural Resource Partners LP less attractive for value investors.

Natural Resource Partners LP’s price-to-book ratio is lower than its peers. This could make Natural Resource Partners LP more attractive for value investors when compared to the industry median at 1.31.

You can read more about Natural Resource Partners LP’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Yankuang Energy Group Co Ltd (ADR)’s Value Grade

Value Grade:

Yankuang Energy Group Co Ltd is a China-based international comprehensive energy company engaged in coal and coal chemical industry. The Company operates in five segments. The Coal Mining segment is engaged in underground and open-cut mining, preparation and sale of coal and potash mineral exploration. The Smart Logistics segment provides railway transportation services. The Electricity and Heating Supply segment provides electricity and related heat supply services. The Equipment Manufacturing segment is engaged in the manufacture of comprehensive coal mining and excavating equipment. The Chemical Products segment is engaged in the production and sale of chemical products. The coal products mainly include thermal coal, pulverized coal injection (PCI), and coking coal. The coal chemical products mainly include methanol, ethylene glycol, acetic acid, ethyl acetate and crude liquid wax, among others. The Company distributes products in the domestic market and to overseas markets.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Yankuang Energy Group Co Ltd (ADR) has a Value Score of 96, which is considered to be undervalued.

Yankuang Energy Group Co Ltd (ADR)’s price-earnings ratio is 6.5 compared to the industry median at 4.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Yankuang Energy Group Co Ltd (ADR) less attractive for value investors.

Yankuang Energy Group Co Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Yankuang Energy Group Co Ltd (ADR) less attractive for value investors when compared to the industry median at 1.31.

You can read more about Yankuang Energy Group Co Ltd (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Coal Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Coal stocks as well as other industrys.

Choosing Which of the 3 Best Coal Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Hallador Energy Co stock has a Value Grade of A.
• Natural Resource Partners LP stock has a Value Grade of B.
• Yankuang Energy Group Co Ltd (ADR) stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Coal industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Coal Stocks

Want to learn more about Coal stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Coal Stocks for Friday, April 26
• What You Need to Know About Arch Resources Inc's Q1 Earnings
• Why Arch Resources Inc’s (ARCH) Stock Is Up 5.08%
• Why Consol Energy Inc’s (CEIX) Stock Is Up 4.05%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.