US Met Coal Stocks: Warrior Met Coal Better Than Alpha Metallurgical Resources, But I Rate Both A Hold

Summary

• Warrior Met Coal is slightly more attractive than Alpha Metallurgical Resources due to higher gross margins and average coal quality, but both remain fundamentally sound.
• Until metallurgical coal prices bottom and trade policy uncertainties dissipate, a Hold rating for both HCC and AMR seems justified.
• While valuations for both companies are historically high, HCC is currently relatively cheaper than AMR.
• A rebound in coal prices and/or a weaker US dollar should benefit both, but until then I recommend staying on the sidelines due to persistent risks.

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Warrior Met Coal Inc. (NYSE:HCC) is an Alabama-based pure metallurgical coal miner. I covered its most direct peer, Tennessee-headquartered Alpha Metallurgical Resources (NYSE:AMR), earlier this year and have decided to

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.