Coal Isn’t Dead—It’s Undervalued

Why Coal Stocks Are Drawing Interest Despite Their Unpopularity

Coal has long been considered one of the least desirable investments, especially as environmental concerns and ESG trends steer capital toward cleaner energy. Yet despite its tarnished reputation, a growing group of investors is taking a fresh look at it—largely due to ongoing demand and limited supply.

Energy consultancy Wood Mackenzie recently projected that coal demand could remain resilient through 2030, contradicting many past forecasts of rapid decline. “While the long-term move toward renewables is still in motion, the transition is proving more complex,” said Anthony Knutson, global head of thermal coal markets at Wood Mackenzie. “Energy security and affordability are now top priorities for many countries.”

These shifting priorities led Range Fund Holdings to launch the Range Global Coal Index ETF (COAL) in early 2024. Despite its modest $20 million size, the fund is one of the few dedicated ETFs on the market. CEO Tim Rotolo told MarketWatch the fund reflects a broader recognition of coal’s role in supporting energy reliability—especially following Russia’s invasion of Ukraine and the resulting energy crisis.

“In a crisis, the goal becomes ensuring access to affordable energy—not climate goals,” Rotolo said.

The fund’s top holdings include Yancoal Australia, Warrior Met Coal, and Alliance Resource Partners. It maintains a 50/50 allocation between metallurgical coal (used in steelmaking) and thermal coal (used for electricity and heating). Since launch, the ETF is down around 21%, but Rotolo sees long-term opportunity in the sector’s overlooked fundamentals.

He argues that investor aversion to coal has created a market mispricing. For example, Peabody Energy dropped to under $1 per share in 2021, down from $45, and has since rebounded to around $17. Limited financing and regulatory hurdles forced many companies to focus on buying back stock or reducing debt—moves that can benefit shareholders when valuations are low.

“There were no other options,” Rotolo said. “And that’s often when you find value—when everyone else has walked away.”

He believes the bigger factor for coal prices is supply, not demand. “If demand remains stable and supply contracts, its prices can surge. That’s good for coal stocks.”

Countries like India and China continue to drive demand, and coal remains an affordable energy option—especially given the long lead times for gas turbines and the limitations of renewables in fast-growing economies. “Asia’s younger coal fleet is adapting alongside renewable expansion,” Knutson added.

Rotolo’s firm also launched a nuclear-focused ETF (NUKZ) at the same time as COAL, which is up 75% since inception—showing that investors are open to energy strategies beyond mainstream narratives.

In a market where consensus often proves wrong, some see coal’s deep unpopularity as an opportunity—not a warning sign.