Investors in the coal sector have been waiting for a light at the end
of the tunnel for some time now, but so far any new lights have just
been another oncoming train. Natural Resource Partners (NRP)
has held better than most though, as the company's strategy of
operating as a royalty-collecting lessor helps mitigate some of the
operating issues that miners like Arch Coal (ACI), Cloud Peak (CLD), and Alpha Natural Resources (ANR) have faced. It also has done the stock no harm to see management move in a similar direction to Penn Virginia Resource Partners (PVR) and prioritize diversification away from coal.
Even
with diversification, coal royalties are still two-thirds of the
revenue base and a key driver of the company's cash flow and
distributions. With that, I do wonder if we have seen the worst of times
in the U.S. thermal coal and global met coal markets. There are
certainly stocks out there with more leverage to higher coal prices
(Arch Coal and Cloud Peak certainly among them), but Natural Resource
Partners' large distribution and apparent undervaluation do make this a
name worth checking out today.
Follow this link to continue reading:
Could Natural Resource Partners Be Seeing A Bottoming Out In Coal?
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