Back to top

Analyst Blog

On Oct 4, 2013, we maintained our Neutral recommendation on Natural Resource Partners L.P. (NRP - Analyst Report). The Houston-based mineral reserve properties owner currently carries a Zacks Rank #3 (Hold).

Why the Reiteration?

Natural Resource Partners delivered a lackluster performance in the last quarter due to weakness in the metallurgical (met) coal market and lower receipts from coal royalties. The reiteration takes into account the partnership’s exposure to price volatilities especially in a sluggish U.S. economy and amidst pressing regulatory obligations.

However, Natural Resource Partners’ focus on the development of its low-cost and profitable mines in the Illinois basin will lend significant stability to the future revenue stream. The completion of the 11% purchase of interest in the reserve-rich Bakken play from Abraxas Petroleum Corp. (AXAS - Snapshot Report) will boost the partnership’s growth trajectory.

In addition, the World Steel Association predicts a 3.2% increase in global steel utilization in 2014 which will drive Natural Resource Partners’ met coal sales. The implementation of longwall technology in the Illinois Basin mine will aid the partnership in minimizing its operating cost and increase production. We believe these strategic steps will support the partnership to achieve its expected revenue of $330-$375 million in 2013.

Furthermore, Natural Resource Partners’ favorable liquidity position will allow the partnership to maintain regular distribution payments.

Nevertheless, an increase in transportation cost and dependence on a few customers might act as growth deterrents for the partnership’s business.

Other Stocks to Consider

Well-positioned Industry players at present are Zacks Ranked #2 (Buy) SunCoke Energy Inc. (SXC - Snapshot Report) and James River Coal Co. .

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%