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Strength Seen in Alpha Metallurgical (AMR): Can Its 7.2% Jump Turn into More Strength?

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Alpha Metallurgical (AMR - Free Report) shares soared 7.2% in the last trading session to close at $56. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 42.2% gain over the past four weeks.

Alpha Metallurgical Resources is poised to benefit from improving metallurgical coal demand as gradual recovery in the global steel industry will result in fresh demand.  Its high quality coal assets and low- cost profile are an added advantage compared to its peers.

The company is the largest domestic metallurgical coal producer and generates nearly 71% of its revenues from coal exports. Its recent investment in low-cost mines ensures future metallurgical coal production to remain strong with minimal growth capital investment.

Price and Consensus

Price Consensus Chart for AMR

This company is expected to post quarterly earnings of $2.77 per share in its upcoming report, which represents a year-over-year change of +173.9%. Revenues are expected to be $471.3 million, up 17.6% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Alpha Metallurgical, the consensus EPS estimate for the quarter has been revised 27.1% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on AMR going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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