While unconventional energy sources are becoming more popular, they cannot meet the total energy demand. In this scenario, coal remains a traditional and stable source of energy that will not be readily replaced.
So, investors should check out fundamentally strong coal stocks, Yankuang Energy Group Company Limited (YZCAY) and SunCoke Energy, Inc. (SXC).
According to Trading Economics global macro models and analyst forecasts, coal is likely to trade at 187.94 USD/MT by the end of this quarter. In the next 12 months, analysts anticipate it to trade at 213.91.
Coal production in the United States climbed 9% in March, from more than 46 million short tons (MMst) in February to over 51 MMst.
The coal market covers coal mining industries that use underground mining, strip mining, culm bank mining, and other surface mining methods. The coal mining industry also develops coal mine sites and enhances coal through cleaning, washing, screening, and sizing processes. The coal market is expected to grow to $658.68 billion by 2027 at a CAGR of 1.4%.
Let’s delve deeper into the fundamentals of the stocks.
Yankuang Energy Group Company Limited (YZCAY)
Based in Zoucheng, the People’s Republic of China, YZCAY engages in the mining, preparation, and sale of coal worldwide.
YZCAY’s forward EV/Sales multiple of 0.46 is 73.4% lower than the industry average of 1.73. Its forward EV/EBITDA multiple of 7.12 is 41.1% lower than the industry average of 12.09.
YZCAY’s trailing-12-month levered FCF margin of 14.90x is 134.9% higher than the 6.34x industry average. Its trailing-12-month ROTC of 17.79% is 63% higher than the 10.92% industry average.
YZCAY’s net assets came in at RMB6.21 billion ($897.97 million) for the period that ended March 31, 2023, compared to RMB6.16 million ($891.03 million) for the period that ended December 31, 2022.
Also, its total assets came in at RMB34.68 billion ($5.01 million), compared to RMB31.86 billion ($4.61 million) for the same period the prior year.
The consensus revenue estimate of $20.62 billion for the year ending 2024 represents a 14% increase year-over-year. Its EPS to is expected to grow 5% per annum for the next five years. The stock has gained 19.3% over the past year to close its last trading session at $32.95.
YZCAY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
YZCAY has a B for Value, Stability, and Quality. Within the A-rated Coal industry, it is ranked first among 11 stocks. Click here for the additional POWR Ratings for Growth, Sentiment, and Quality for YZCAY.
SunCoke Energy, Inc. (SXC)
SXC 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.
SXC’s forward EV/Sales multiple of 0.69 is 52.7% lower than the industry average of 1.46. Its forward Price/Sales multiple of 0.39 is 62.9% lower than the industry average of 1.05.
SXC’s trailing-12-month asset turnover ratio of 1.20x is 60.8% higher than the 0.74x industry average. Its trailing-12-month ROTC of 7.25% is 12.3% higher than the 6.46% industry average.
SXC’s revenues increased 10.9% year-over-year to $487.80 million in the first quarter, which ended March 31, 2023. Its total current assets came in at $409.80 million for the period that ended March 31, 2023, compared to $374 million for the period that ended December 31, 2022.
Also, its total assets came in at $1.67 billion, compared to $1.65 billion for the same period.
Street expects SXC’s EPS to increase 42.9% year-over-year to $0.20 in for the quarter ending December 2023. It has surpassed EPS estimates in three of four trailing quarters. Over the past nine months, the stock has gained 11.9% to close the last trading session at $7.43.
SCX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #3 in the same industry. It has an A grade for Sentiment and a B for Value. To see additional SCX’s rating for Growth, Stability, Momentum, and Quality, click here.
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YZCAY shares were trading at $33.38 per share on Friday morning, up $0.43 (+1.31%). Year-to-date, YZCAY has gained 9.73%, versus a 7.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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