Our Stock of the Week is Ramaco Resources (METC). METC is a metallurgical coal company with 300 million tons of high-quality reserves, low production costs, and no debt. Coal is despised by the environmental lobby, but, like oil, it isn’t going to go away soon. In fact, companies like METC are likely to benefit from the refusal to license new coal mines.
METC is expected to earn $1.86 in calendar year 2023 and grow 22% to $2.27 in 2024. With a trailing PE of just 12, that looks like a good value, but what is particularly interesting about METC is that in a study in conjunction with the Department of Energy, METC discovered it was sitting on an estimated $37 billion worth of rare earth elements (REEs).
Rare earth metals are essential to technology like lasers, cell phones, batteries, jet engines, specialty glass, and many other things, but there is a complicated and expensive mining process. However, the US is heavily reliant on these minerals and exports a large amount to China and other countries.
METC is not likely to commercialize the rare earth minerals it holds anytime soon, but they are of huge potential value and will support the stock. With the coal business doing well, the potential for further upside looks strong.
Technically, the stock has been basing after spiking up on the Rare Earth news in the Wall Street Journal. It has formed a solid base and is pushing to a new closing high. As always, we will not chase the action on Monday but will look to aggressively trade it as the action develops.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in METC.. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
