Shares of leading mining company Alpha Metallurgical Resources (AMR) have gained a whopping 370.6% so far this year on the back of a favorable pricing environment and its significant capital investment to meet customer demands. However, given the company’s uncertain growth prospects, due to an increasing societal preference for renewable energy, can the stock continue rallying? Let’s discuss.Tennessee-based mining company Alpha Metallurgical Resources, Inc. (AMR) processes and sells metallurgical (met) coal and thermal coal in Virginia and West Virginia. Despite pandemic-induced disruptions in the supply of coal, AMR’s efforts to allocate capital for projects to diversify its product offerings and its long-standing contractual arrangements have helped the stock gain 370.6% in price year-to-date and 128.9% over the past three months. In addition, its Met segment revenue surged 4.7% sequentially to $376.8 million in its last reported quarter.
Although an improved pricing environment has helped strengthen AMR’s Met business, its heavy debt load and decreased cash balance due to inventory build could limit AMR’s growth. Furthermore, the company’s revenue growth is not being translated into profits.
So, here is what we think could influence AMR’s performance in the coming months: