To put it mildly, it has not been a good year for coal stocks. The EPA”s proposal back in June to cut carbon emissions certainly did not help. And when the entire market took a major hit earlier this month (Oct. 8), the coal stocks were among those leading the way down.
Of the five small cap coal stocks we have watched this year, however, one stands out, according to Marketrealist.com. That’s Westmoreland Coal (Nasdaq: WLB), the sixth largest North American coal company. WLB was founded in 1854 in Westmoreland County, PA but is now completely out of the eastern U.S. and based in Englewood, CO. As of Oct. 22, WLB stock was up 83 percent this year, while the rest of the coal stocks are way down, according to the in depth Marketrealist.com report.
In a nutshell, what Westmoreland, which operates 13 mines in the Western U.S. and Canada, has done that the others haven’t is make smart acquisitions in a competitive consolidation environment, the report indicates. WLB kept its capital structure light, unburdened by the large interest expenses and maturing debt that many other coal producers have taken on. It also operates in the “low cost western region” and is a “pure-play thermal coal” producer. WLB closed Oct. 24 at $33.36, down 10 cents for the day, with a market cap of $567 million. It’s 52-week trading range is $13.71-$45.19.
Comparing coal companies is not for the uneducated. Not all mines are the same (is it a surface mine or underground? Is it longwall mining, truck and shovel mining, etc), nor are the distances to ship the coal product (short-haul?) to power plants or steel mills. Then there are several types of coal to be mined. So the comparisons certainly may not be apples to apples, but here is a list of four other small cap coal producers we have watched.
Cloud Peak Energy (NYSE: CLD), based in Gillette, WY, is a holding company that manages Cloud Peak Energy Resources. Its operations include three surface coal mines (two in Wyoming, one in Montana) and a 50 percent interest in the Decker mine in Montana. Its coal is sold to domestic and foreign utilities, according to a Reuters profile. In 2012, CLD made several acquisitions including the Youngs Creek Mining Company and mining assets from Chevron and CONSOL Energy. CLD was upgraded from Hold to Buy by Brean Capital on Oct. 16. CLD closed Oct. 24 at $11.06, up 19 cents for the day, with a market cap of $669 million. Its 52-week trading range is $9.82-$22.43.
Alpha Natural Resources (NTSE: ANR), based in Bristol, VA, is a supplier and exporter of metallurgical coals for use in making steel and thermal coal for utilities and manufacturing. ANR has an Eastern Operation in northern and central Appalachia along with coal brokerage and road construction businesses. Its Western Operation includes two Powder River Basin mines in Wyoming. To learn more and see its results for the third quarter and first nine months of 2014, tune into the results conference call and webcast at 11 a.m. Eastern on Thursday, Oct. 30 (details on its website). ANR closed Oct. 24 at $2.16, up 1 cent for the day, with a market cap of $478 million. Its 52-week trading range is $1.59-$8.30.
Arch Coal Inc. (NYSE: ACI), based in St. Louis, is producer and seller of metallurgical and thermal coal for power plants, steel mills and industrial facilities. It operates or contracts out the operation of 22 mines located in most of the coal-producing regions of the U.S. ACI was founded in 1969. In its second quarter earnings call on Oct. 21, ACI reported revenues of $714 million for the three months ended June 30, and a net loss of $97 million, or $0.46 per diluted share. ACI closed Oct. 24 at $xxx, xx for the day, with a market cap of $xxx million. Its 52-week trading range is $1.35-$5.37.
Walter Energy (NYSE: WLT), based in Birmingham, AL, is a producer and exporter of metallurgical coals for the global steel industry. The company also produces related products including thermal and industrial coal, anthracite, metallurgical coal and natural gas. Its U.S. operations include surface mines, underground mines, coke plant and natural gas operations in Alabama, and underground and surface mining operations in West Virginia. Its Canadian and United Kingdom operation include mines in British Columbia and South Wales. WLT closed Oct. 24 at $2.19, down 6 cents for the day, with a market cap of $144 million. Its 52-week trading range is $1.47-$19.50.