Hallador Has Tripled: Here's Why It Could Triple Again

Back in July — seeing that stocks may be ready to wobble — I came up with a list of “Pullback Plays” … a list of five companies worth grabbing if their share prices hit the skids.

One of those companies was especially interesting — the “utility-in-the-making” firm called Hallador Energy Co. $HNRG ( 0.0% ). The stock was at $8.41. And I said if it got to $6 or less, grab it. On Aug. 21, Hallador closed at $5.90 — and in a report the next day, I told you folks the “buying window” had arrived.

For anyone who acted, it’s worked out great. The stock soared $2.93 a share yesterday — more than 19% — to close at $18.12.

If you followed that “call,” you’re sitting on a 207% gain in nine months — a triple, and the annualized equivalent of roughly 285%.

On a utility stock …

That’s awesome … and it might be just the start.

You see, the “Hallador Bandwagon” is growing.

And the stock could triple — again — from here …

Don’t Miss Our Next Winners

In my business — financial newsletters — it’s important to follow up on stories …

There are lessons to learn … and there’s a need to affirm the long view where Wealth Builders like us really win.

But the fact is that — even in the short term — we keep notching big wins for our Stock Picker’s Corner (SPC) subscribers … both free and paid.

Take Palantir Technologies Inc. $PLTR ( ▲ 0.5% )  – the artificial-intelligence (AI) innovator that’s a player in both the commercial and defense markets. We understood its potential long before it “went mainstream.” We started with it on our Farm Team roster — in essence, our official “Watch List,” when shares traded for $21.40. We moved it into our Model Portfolio on Oct. 9, when the shares were trading at $43.13.

And when the folks at the MoneyShow asked us for their Top Picks for 2025 feature, we gave them an income play and Palantir.

How has it done?

Palantir shares are trading at $128.10, up 498% since we added the company to the Farm Team … 197% since we put it into our Model Portfolio … and nearly 70% so far this year.

So everyone who followed along is happy, the MoneyShow folks are happy … and that makes us happy.

We have other big wins in that Model Portfolio and Farm Team.

And we’ve delivered several in our “Super 10” Special-Situation Portfolio. We rolled out that portfolio back in September as an additional benefit for our SPC Premium family members.

We saw these stocks as intermediate-term profit plays. But, as it turned out, the payoffs started almost immediately — with two quick wins.

The first was Dutch Bros Inc. $BROS ( 0.0% ), an innovative coffee chain with an intriguing growth story. It delivered a near-60% windfall in a mere 10 weeks — equal to a 312% gain over a full trading year.

The second was grocer Sprouts Farmers Market Inc. $SFM ( ▲ 3.62% )  , which we cashed out of in early February for roughly a 50% gain. (To make sure our Super 10 list remained, well, a super 10, we replaced those with two new stocks.)  

Then for a company we shared with all our of our readers, there’s Hallador …

Why I Like This Stock

The Indianapolis-based Hallador is a “utility in the making” – transitioning from a “pure-play” coal miner to what’s known as an “integrated power producer.”

And thanks to our “pullback-play” strategy, we caught this at the perfect moment. We told you about Hallador when its market value plunged to $250 million. With its surging stock price, the market value has zoomed to about $800 million.

Thanks to this “Baker’s Half Dozen List of Triggers,” Hallador could just keep running.

1. Is misunderstood, thanks to a changing business model … as well as dealmaking that could accelerate that transformation.

2. Will benefit because the shift away from “carbon” fuels like coal won’t be as quick or as easy as most folks think.

3. Will get a near-term boost from (eventual) falling interest rates and a long-term assist from rising energy demand.

4. Has a shot at a “Bitcoin (BTC) Kicker” — a “trigger” that dovetails with our “what-comes-next” view of that bellwether cryptocurrency. 

5. Has inked a deal to sell power to an AI data center venture – a shrewd deal that adds long-term predictability to its top line picture.

6. Is seeing repeated buying by corporate insiders.

7. And could triple again from here thanks to projected surges in long-term cash flows.

Let’s dig into a few of these in greater detail …

That “Misunderstood” Transformation

Thanks to its Sunrise Coal unit, Hallador has historically operated as a “thermal-coal” miner — selling that coal to power plant operators.

In 2022, this changed. The company created Hallador Power – acquiring the Merom Generating Station, a two-unit, coal-fired power plant rated at 1,080 megawatts. The Sullivan County, Ind.-situated plant has been running since 1982 and will sell electricity back into the Midwest power grid – and to Hoosier Energy customers.

As part of the deal, Hallador also acquired Merom’s Midcontinent Independent System Operator (MISO) grid-interconnection rights, which is as crucial to a utility as a liquor license is to a bar.

In both cases, you need that official approval to do business. And, in both cases, that approval is very tough.

Years ago, when I covered local government at the start of my career as a newspaper reporter, I saw how tough it was for new bars, restaurants or retailers to obtain liquor licenses; they were capped in number, which made them super expensive to acquire.

Grid rights are similarly scarce and strategically vital. And with utilities seeking to sell electricity back into the grid — and to power-hungry hyperscaler data centers essential to the Artificial Intelligence Era — those rights are like digital gold.

In early 2024, Hallador streamlined its Sunrise Coal unit – cutting its capital investments by $10 million, slashing production at its high-cost Freelandville and Prosperity mines and emphasizing its low-cost mining operations.

The Commodity Supply Shortfall

To the investment masses, coal is a four-letter (cuss) word.

Experts see it differently.

My good friend Matt Warder — publisher of The Coal Trader and perhaps the most prominent independent coal analyst in the market today — has talked often about the need for a “reasonable energy transition.”

Reasonable … and reliable, according to Hallador … 

“A strong America requires a reliable energy grid,” Hallador says. “Power generating is a natural next step for our evolving company [and for America’s shift to] renewable energy solutions. Hallador Power is the pragmatic approach to that transition … Hallador Energy believes that there is no one solution to our energy needs but takes a practical, reliable approach to ensure America’s economy is plugged in and working at full power.”

Hallador’s “pragmatic” transition … and Matt’s “reasonable” transition: Those are two ways to say the same thing.

And they’re both correct.

During that transition — and over the long haul — there's a huge opportunity: The U.S. energy grid of today won’t be modern enough, powerful enough or reliable enough to meet the country’s future electricity demand.

 Small-cap specialist Cove Street Capital sees it as I do:

Indeed, on that last point, the U.S. Energy Information Administration (EIA) says global electricity demand could surge by 33% to 75% by 2050, when as much as two-thirds of the world’s electricity production could come from nuclear and renewables. Both the “stickiness” of carbon fuels and the shift toward renewables will benefit Hallador.

In the near term, the coal market (and coal prices) will whipsaw investors. But over the long haul – thanks to new sources of energy demand – coal faces the same supply shortfall as commodities like copper, silver, nickel and lithium, to name a few.

Crypto and AI are two of those new “demand ignitors.”

A True Digital Revolution

Coal miners are looking to capitalize on Bitcoin “miners.”

For instance, U.S. coal producer Alliance Resource Partners LP $ARLP ( ▲ 0.6% )  has diversified into mining the bellwether cryptocurrency as its roster of coal customers shrinks.

The Tulsa-based Alliance originally did this as a corporate “pilot project” — one that would monetize the excess power load from its River View Mine in Kentucky into some form of cash. It reported a cache of $30.3 million in Bitcoin at the end of the first quarter — up from $9.6 million at the end of last year.

Hallador and AboutBit, a Kentucky-based private venture, are planning a crypto-mining venture adjacent to the Merom power plant – though no details have emerged of late.

Then there’s Hallador’s AI play.

In early January, Hallador said its power unit signed a deal with a “leading global data center developer” that could net the utility as much as $5 million in the first half of this year as the two sides work toward a long-term, “definitive” agreement.

If that deal is closed, Hallador says the data-center firm will “contract the majority of [our] energy and capacity at prices higher than the forward curve for more than a decade.”

Known as a “power purchase agreement” (PPA), this deal could give Hallador 15 years’ worth of predictable cash flow – as much as $200 million to $250 million a year.

Think about that: We’re talking a quarter of the company’s current market value – in one year and every year, for a decade or a decade-and-a-half, Substack’s Multibagger Monitor wrote in April.

“Strategically, Hallador is perfectly positioned,” the analyst wrote. “Indiana is becoming a key data center hub thanks to tax incentives, abundant land, and relatively cheap power. The region’s electricity grid, managed by MISO, is already in a capacity shortfall, making existing baseload power assets like Merom even more valuable. Large tech companies — including Amazon, Google and Meta — are pouring billions into the Midwest, and Hallador’s MISO interconnection gives it a competitive edge in attracting long-term, high-credit-quality customers.”

Insiders see a hefty upside to come …

Insider Buying 

In our 1998 book Contrarian Investing, my co-author and I made a big discovery: On a beaten-down stock, the most-bullish signal of all is insider buying.

As I told you in a past report, independent Hallador Director Charles Ray Wesley in March bought 46,100 Hallador shares on the open market — in a range of $5.21 to $5.25 — spending $240,100 to do so. That left him with 245,570 shares at the end of that reporting period — a 23% increase in his holdings.

Wesley bought another 5,000 shares in August (at an average of $5.77 a share) and an additional 25,000 shares (at $5.97 a share) in September, spending an aggregate $180,000 to do so and bringing his stake to 275,572 shares. 

And he wasn’t alone. 

Director Darrell Thomas Gray has also been shopping. He bought 4,000 shares in June ($6.94), 20,000 shares in mid-August ($5.70) and 14,000 shares in late August ($6.36), bringing his total holdings to 51,000 shares.

This is a major “tell” – for several reasons.

First, open-market buying is a bullish signal. Corporate insiders get shares in a lot of ways these days — via options, through bonuses, and even with tracking rights. So when they spend their own money to buy shares in the open market, that’s often significant. 

After all, who can better see the all-important “what comes next” for a company? 

And the price there was also worth noting: Most of these were close to the $6 “Buy” level I identified.

Let’s Run the Numbers

So where does Hallador go from here?

Let’s start by circling back to the start – and the fact that investors still don’t understand Hallador’s business model change.

When those investors realize the company is now a utility – and not a coal miner – the valuation will change.

According to Multibagger Monitor, that valuation multiple could increase from about 2.5 times EBITDA right now to a range of eight to 10 – pushing the stock to a range of $20 to $25 a share.

As more investors catch on, Hallador’s power deals are fleshed out and the cash flow escalates, the stock could rise to a range of $40 to $50 a share, the analyst wrote.

One last point: In this environment, if Hallador gets up and running, it could easily end up as a buyout target.

See you next time;