Why the Coronado (ASX:CRN) share price has leapt 30% in a month

The coal producer has been one to watch over the last month or so.

| More on:
Group of smiling coal miners in coal mine owned by Whitehaven Coal Ltd

Image source: Getty Images

The Coronado Global Resources Inc (ASX: CRN) share price is spending some time in the red on Tuesday morning, now trading at $1.33 apiece.

Yet Coronado shares have delivered outsized returns over the last month, having gained 30% – well ahead of the S&P/ASX 200 Index (ASX: XJO)’s drop of 2% during this time.

Let’s see what’s been fuelling this growth.

But first – a quick recap on Coronado Global Resources

Coronado is in the business of producing high-quality metallurgical coal, also known as coking coal. It is an essential ingredient for steel production worldwide.

The company has a portfolio of operating mines, mining complexes and projects in Queensland and the US, with a footprint that also spans across the Asia Pacific, India and Brazil.

At the time of writing, Coronado Global has a market capitalisation of $2.25 billion.

What’s fuelling the Coronado share price lately?

We can’t assess Coronado Global’s share price without first addressing the elephant in the room and that’s the current prices coal is fetching on commodity markets.

Coal pricing has been on a rampage in 2021, reaching all-time highs in June. It now trades at US$204.8/tonne, a 274% increase over the last 12 months.

Coronado is an ASX resources share that produces a commodity, meaning its share price will fluctuate with volatility in the broader commodity markets.

With this information in mind, and with a recent uptick in coal pricing since August, a picture starts to form as to what’s driving returns here.

Coronado Global’s share price has also been on the move after two key updates in the company’s growth narrative.

In late June, the company announced the resignation of its secretary, vice president and chief legal officer Richard Rose.

Rose joined Coronado in 2017 and saw the company through its ASX listing in 2018. Coronado said Rose would stay on until a replacement was found either internally or externally.

Last month, the company released its half-year results. In its report, the company recognised a 10% year on year (YoY) increase in saleable production while revenue grew 12% YoY.

Despite the growth, Coronado Global’s net loss after tax (NLAT) increased by 22% to $123 million from the year prior.

Coronado Global Resources share price snapshot

The Coronado share price has been an outperformer this year to date, having posted a return of 22% since January 1.

This extends its return in the past 12 months to 48%, well ahead of the broad index’s return of about 25% in the last year.

Should you invest $1,000 in Coronado Global Resources right now?

Before you consider Coronado Global Resources, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Coronado Global Resources wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers