Arch Resources (
ARCH, Financial) is a leading producer of metallurgical coal used in steelmaking. At our entry price, Arch shares were trading at a discounted price of USD 133 per ton of metallurgical coal; we consider this price to be insufficient. At our estimated capital intensity for this business, the industry would need a price closer to USD 150 per ton to generate a 10% return after taxes. If our forecast is correct, Arch Resources stock is worth more than double our purchase price.
From azValor Asset Management’s first-quarter 2021 commentary.
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