In the face of ambitious climate pledges from several countries worldwide, many are unable to break their dependence on coal, as consumption is set to rise. Given the optimism, it could be wise to add fundamentally strong coal stocks Peabody Energy Corporation (BTU – Get Rating), Alpha Metallurgical Resources, Inc. (AMR – Get Rating), and CONSOL Energy Inc. (CEIX – Get Rating) to your portfolio, trading at discounted valuations.
Over the past year, the coal sector gained traction due to geopolitical tensions and unprecedented economic conditions. The Russian-Ukraine war and the subsequent response from the United States and its allies have had a crippling impact on energy resources, boosting the demand for pivotal commodities globally.
The global coal market grew from $614.96 billion in 2022 to $621.89 billion in 2023 at a CAGR of 1.1%. Furthermore, the coal market is expected to grow to $658.68 billion in 2027 at a CAGR of 1.4%.
Even though some countries have rolled out climate strategies to decarbonize their economies over the coming decades, with gas shortages and a long road ahead to meet global demand for renewable energy, many continue to rely on coal for power and industry.
While coal use is expected to decrease in the long term, demand is set to remain robust in 2023, and consumption is set to hit an all-time high. Emerging and developing economies in Asia are set to increase coal use to help power their economic growth, even as they add more renewables, according to the International Energy Agency (IEA).
Furthermore, the market’s continued correction has led to many quality stocks trading at reasonable valuations. Given the fundamental strength, it could be wise to invest in BTU, AMR, and CEIX to gain from their explosive upside. Moreover…
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