Small-Cap Stocks to Buy: Alliance (ARLP)
Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a U.S. coal miner with operations in the Illinois Basin and Appalachia, basically Illinois, Indiana, Kentucky and West Virginia. ARLP focuses on steam or thermal coal, which is used mainly for generating power for utilities and industrial energy plants. The other type of coal is coking coal, which is used for making iron and steel.
With steel production still at low levels, many big coal operations suffered greatly with the drop in demand for coking coal. But ARLP has weathered the storm better because it sells thermal coal.
Demand has slackened for thermal coal since much of the demand has been shifted to natural gas, which is a more efficient fuel. But coal still has its customers and the new administration in Washington is doing all it can to keep coal alive.
As a limited partnership, the payoff here is more the dividend than the stock appreciation. Right now, ARLP is kicking off a nearly 8% dividend yield.