Coal miner CONSOL Energy (CEIX) reported 4Q21 earnings Tuesday morning and its report shows that it’s time to buy commodity stocks. The reason is simple: The price of the stuff they sell is going up. CEIX’s average selling price per ton of coal was $51.27 in 4Q21, $47.46 in 3Q21, $44.02 in 2Q21 and $41.39 in 1Q21. In 2022, they expect average selling price per ton to increase even further to $55-$57 – with only a marginal increase in cash cost per ton.
Even though commodities are likely now in a secular bull market, commodity stocks are priced like their increases in price are transitory. CEIX’s Adjusted EBITDA was $378 million in 2021 while the entire company is valued at only a little more than $900 million. With coal prices going up even further in 2022, CEIX is likely to earn even more money. The multiple suggests that the market believes these are windfall gains that can’t last. I’ll take the other side. To quote the legendary commodities bull Jim Rogers: I just wait until there is money lying in the corner and I go over there and pick it up.