- The S&P/ASX200 is down 11% year to date
- Three Australian stocks that have defied the trend
- Outlook for these three big stock market winners
Few would have been able to pick the best stocks to invest in Australia in 2022 would have been coal mining companies.
The three stocks shown below have turned out to be three of the biggest stock winners of 2022.
You would have doubled your money for every dollar you invested in the companies at the end of 2021.
On top of the sharp rise in share price, investors will receive a healthy dividend as bumper profits are returned to shareholders.
In 2021, the outlook was clouded for coal producers, particularly in Australia. With Australian coal exports shut off to the China market, Australian coal producers had to find new markets.
Top Australian Brokers
By tweaking their product offering, for example, selecting lower ash and water content for export, Australian coal producers could make headway in the Indian coal markets.
Other Asian nations were also looking for increased supply as gas power generation became increasingly expensive. The displacement of Russian piped gas to Europe suddenly made seaborne liquified gas (LNG) supplies more difficult to get a hold of, and thermal coal was a welcome replacement.
More recently, with the Russian supply being cut off from the European markets, Australian coal has helped fill some gaps. Record volumes of Australian coal headed to the key European input of the Netherlands in 2022.
All the stars aligned perfectly for these three companies. They can now pay down a large proportion of their debt and return money to shareholders, making their stock values appreciate considerably.
New Hope Corporation Ltd ASX:NHC (NHC)
NHC is up 100% from the end of last year. Founded in Brisbane in 1985, NHC has operations spanning Queensland and New South Wales.
Its cornerstone of operations is the Bengalla coal mine in the Hunter Valley region of New South Wales. It produces coal primarily for power generation in the local and international markets.
With coal prices more than fourfold what they were in the first half of 2021, this financial year for NHC will break all records.
Yancoal Australia Ltd ASX:YAL (YAL)
YAL owns, operates, or participates in 11 coal mines across Australia. YAL produces a mix of coal for power generation and steel production for international markets.
YAL is up over 125% a year to date, and as pure coal plays its part, the share price has rocketed along with the stratospheric rise in international coal prices.
With the YAL assessment for Australia’s market share of high-grade seaborne coal to grow to 27% by 2050 and global coal consumption increasing yearly, YAL is well positioned to profit from coal’s resurgence.
Whitehaven Coal Ltd ASX:WHC (WHC)
Whitehaven’s vision of supplying high-energy, low-ash, low-sulphur power generating coal to international markets, combined with the unprecedented demand for seaborne coal, has stoked WHC share price to all-time-highs.
WHC is up 136% year-to-date. Record margins in their coal-producing assets allow them to pay down debt and open the door to sizeable shareholder dividends. WHC’s share price has ridden the seaborne coal boom.
With international customers all over Asia and India, the strong market demand for quality Australian coal will continue well into the future, if not always at these astronomical levels.
It is challenging to tell what the future holds for commodity prices. There are many moving parts to a massive and complex supply chain. Uncertain futures require a certain resilience to stay the course, and resilience is a characteristic worth holding high when considering investing your hard-earned money.
Recent history has shown that these three companies showed remarkable resilience when the future looked challenging. All three were able to open new markets, pay down debt and make a sizeable return for their shareholders.