Why Ramaco Resources Trounced the Market Today
Key Points
It just announced a shareholder-pleasing measure.
It's authorized to spend up to $100 million on this.
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Coal company Ramaco Resources (NASDAQ: METC) was trading more like a beloved precious metal on Tuesday. That morning, the company announced a sizable stock buyback program, and investors celebrated the news by pushing its share price up by almost 9%. That was well higher than the 0.5% increase of the benchmark S&P 500 index.
No coal in this stocking
Ramaco's board of directors has authorized a new repurchase initiative, under which the company can buy up to $100 million worth of its Class A common stock over the next two years.
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In the press release trumpeting the program, Ramaco implied that its current financial situation was sturdy enough for the move. It quoted CEO Randall Atkins as saying that "With the closing of Ramaco's previously announced $600 plus million (before fees) in capital raises in the second half of 2025, we are well-positioned to pursue opportunities to unlock value and maximize shareholder returns.
"The share repurchase program highlights our confidence in our continued operational performance as well as financial strength," he added.
Rare potential
Since it specializes in metallurgical coal, Ramaco (and its peers) are essentially plays on the steel industry. As long as demand for steel is fairly robust, the industry should do well, all things being equal.
Though steel is on something of an upswing these days, I don't think it's exciting enough on its own to warrant a buy for Ramaco. Yet the company is an active developer of valuable rare-earth elements; in fact, it owns a rare-earth mine in Wyoming. If anything, I'd put money on Ramaco stock because of the high potential of such materials.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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