Alliance Resource Partners, L.P

Alliance Resource Partners, L.P (NASDAQ: ARLP). is a diversified natural resource company. The Company operates through three segments: Illinois Basin, Appalachia, and Minerals. The Illinois Basin segment includes its operating mining complexes. The Company is a producer and marketer of coal primarily to the United States utilities and industrial users. The Company owns both mineral and royalty interests in approximately 1.5 million gross acres in oil & gas producing regions in the United States, primarily the Permian, Anadarko, and Williston Basins.

Key Highlights

• Commodity price risk: The company’s financials are exposed to volatility in the coal prices, as of now coal prices are rising on fears of further supply-chain disruptions and low inventories. Mounting sanctions on Russia for invading Ukraine led to an international energy crunch and exacerbated concerns about an already tight market. However, energy commodity prices are recording sharp volatility on the recognized stock exchanges and can also impact ARLP stock price as well.
• Bearish Momentum: On daily price chart stock is hovering near crucial level, if it falls below the rising trend line support, a selloff in the stock could be extended. Moreover, the leading momentum indicator, the 14-day RSI also recorded a bearish reversal on the daily price chart and hovering in neutral territory with bearish bias at 49.

Technical Price Chart (as on March 14, 2022). Source: REFINITIV, Analysis by Kalkine Group

• Supply Chain Bottlenecks: Destroyed houses. Burnt vehicles. Debris and smoke. Dead bodies. Over the last three weeks, we have gotten used to these visuals from Ukraine. The country’s conflict with Russia is still escalating—ceasefire talks haven’t made much progress. All this bad news for the global economy still struggling with supply-chain nightmares post the COVID-19 pandemic.

Stock recommendation

Give the volatile energy commodity prices on the back of Russia – Ukraine standoff, rising supply chain bottleneck, and resurgence of COVID-19 cased in China and Hong Kong could continue to keep the energy stocks quite volatile in near term. Despite, strong underlying financials of the energy company, a large swing in the underlying commodity prices could have an exponential impact of energy stocks across the globe. Also, bullish technical momentum is exhausting for ARPL as well. Hence, we recommend a “Watch” rating on the ARLP stock at the closing price of USD 14.11 (as on March 14, 2022).

Technical Price Chart (as on March 11, 2022). Source: REFINITIV, Analysis by Kalkine Group.

Technical Summary

Note: Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.