Short Interest Swings in Coal Stocks (ARLP, CLD, NRP)

The short interest in coal-related stocks was mixed during the first weeks of March.

The number of shares sold short in Alliance Resource Partners ARLP, Natural Resource Partners NRP, Peabody Energy BTU, SunCoke Energy SXC and Walter Energy WLT increased between the February 28 and March 15 settlement dates.

But short interest in Alliance Holdings AHGP, Alpha Natural Resources ANR, Arch Coal ACI, Cloud Peak Energy CLD, CONSOL Energy CNX, James River Coal JRCC, Rhino Resource Partners RNO, Westmoreland Coal WLB and Yanzhou Coal Mining YZC declined during that time.

The three coal stocks that saw the largest swings in short interest between the February 28 and March 15 settlement dates were Alliance Resource Partners, Cloud Peak Energy and Natural Resource Partners.

Alliance Resource Partners

Shares sold short in this producer of coal for utilities and industrial users jumped more than 79 percent to more than 265,000. That was the highest short interest since last July, and days to cover rose to more than two. But the short interest was a little more than one percent of the total float.

This Tulsa, Oklahoma-based company has a market capitalization of about $2.3 billion and a dividend yield near seven percent. It is expected to report a 19 percent year-over-rise in revenue for the current quarter. The price-to-earnings (P/E) ratio is less than the industry average, and the return on equity is about 24 percent.

Of the 10 analysts who follow the stock that were surveyed by Thomson/First Call, eight recommend buying shares, three of them rating the stock at Strong Buy. The analysts' mean price target indicates upside potential of more than 17 percent. That would bring it back to a level shares have not seen since February of 2012.

The share price is up more than five percent year to date but has faced resistance around $64 since January. Over the past six months, the stock has outperformed competitors Arch Coal and Peabody Energy, but underperformed the Dow Jones Industrial Average.

Cloud Peak Energy

This Wyoming-based coal mining company saw short interest retreat more than 15 percent in early March to more than 4.41 million shares. The average daily volume was the second highest so far this year. Short interest was more than seven percent of the float.

The company saw an upgrade in early March from a BMO analyst who also downgraded competitors Peabody Energy and Walter Energy. Cloud Peak Energy currently has a market cap of about $1.1 billion and offers no dividend. The P/E ratio is less than the industry average, and the return on equity is more than 20 percent.

The analysts' consensus recommendation has been to hold shares for the past three months. But their mean price target, or where they expect the share price to go, represents about 10 percent potential upside, relative to the current share price. That target is less than the 52-week high, though.

Shares are trading in the same neighborhood as six months ago despite climbing more than nine percent in the past month. The stock has outperformed Peabody Energy and Walter Energy over the past six months.

Natural Resource Partners

Short interest in this Houston-based company increased about 17 percent in the period to 1.32 million shares. That was the greatest number of shares sold short in at least a year, and it represents less than two percent of the company's float. Days to cover rose to about five.

In early March, a director and an executive bought a total of more than 14,000 shares of this mine owner and manager. The company has a market cap near $2.6 billion and a dividend yield of about 9.3 percent. The P/E ratio is less than the industry average, and the return on equity is about 34 percent.

The consensus recommendation of eight surveyed analysts is to buy the shares, and it has been for at least three months. They believe the shares have some room to grow, as their mean price target is more than 11 percent higher than the current share price. That target would be a level shares have not seen since February of 2012.

The share price is more than 23 percent higher year to date, including more than eight percent in the past month. The stock has outperformed competitors such as Cloud Energy and CONSOL Energy over the past six months.