New Hope Corp Ltd (ASX: NHC) shares have regained their earlier intraday losses to be trading just about flat at the time of writing.
Shares in the S&P/ASX 200 Index (ASX: XJO) coal stock closed on Thursday trading for $5.84. At the time of writing, shares are changing hands for $5.83 each, down a fraction of a percent.
For some context, the ASX 200 is up 1.4% at this same time.
Taking a step back, New Hope shares have surged 71% over the past 12 months, racing ahead of the 18.5% one-year gains delivered by the benchmark index.
And that doesn't include the 25 cents a share in fully-franked dividends New Hope has paid (or shortly will pay) eligible stockholders over the year.
If we add those back in, then the accumulated value of New Hope shares has surged 78.3% over 12 months.
And according to Fairmont Equities' Michael Gable, there's still plenty of potential "significant upside" ahead for the ASX 200 coal stock (courtesy of The Bull).
Here's why.
Should you buy New Hope shares today?
"I have been bullish on this thermal coal producer for several months," said Gable, who has a buy recommendation on New Hope shares.
"I believe global demand for coal will remain elevated," he said, citing the first reason you might want to buy the Aussie coal miner.
Thermal coal was recently trading for US$139 per tonne, up 17% since 1 March.
"The conflict in the Middle East is lifting demand for thermal coal, with countries, such as Japan, increasing coal-fired power generation to offset instability in gas markets," he noted.
Indeed, Iranian attacks on LNG cargo vessels in the Strait of Hormuz and a separate attack on a major gas facility in Qatar are causing supply disruptions for numerous nations' energy providers.
As Trading Economics noted:
The developments removed a large portion of feedstock for gas-powered plants in Asia, including Japan and Korea, which are the main consumers of higher grades of Australian thermal coal out of the Newcastle port. Ample appropriate facilities from the two large economies propel gas-to-coal switching for power generation.
Moving on to the second reason that now could be an opportune time to buy New Hope shares, Fairmont Equities' Gable said, "During the past few weeks, NHC shares broke out of a bullish technical pattern on strong volume, which implies significant upside from here."
And the third reason you may wish to buy shares today is the coal miner's strong passive income history and outlook.
While New Hope's latest 10-cent interim dividend was down 47.4% from the prior interim dividend payout amid a big half-year profit decline, that profit slide came amid a significantly lower coal price environment than the miner is facing today.
New Hope shares currently trade on a fully-franked trailing dividend yield of 4.3%.
The post 3 reasons to buy New Hope shares today appeared first on The Motley Fool Australia.
Motley Fool contributor Bernd Struben has no position 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 Scott Phillips.
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