Coal Stokes Wall Street Furnaces

High energy prices are powering more than oil and gas stocks.

They are fueling a rally in "alternative" energy companies -- most notably coal producers -- and some related firms as well.

In today's pricing environment, coal companies can charge twice as much for their product as they did just two years ago. Eager customers, particularly domestic power producers and Chinese steelmakers, are lining up to buy high-priced coal that is nevertheless still affordable when compared to oil and natural gas. Coal producers are, in turn, relying more heavily on railroad companies to ship out their supplies. And even ambitious alternative energy companies, seeking to replace traditional fuel sources, have become attractive to some.

So while many people simply gape at high energy prices -- and scream about the giant companies that profit from them -- some investors are simply looking the other way. They are hunting for stocks, beyond the ExxonMobils (XOM Quote) of the world, that tend to look pretty when energy prices do not.

Bob Howard, author of the investment newsletter Positive Patterns, has been bullish on energy -- particularly the supermajors -- for some time. But he sees upside in coal and railroad stocks as well.

Howard especially likes Penn Virginia (PVR Quote), a coal royalty trust, because of its "superior" reserves and solid dividend. Meanwhile, he says, the railroads -- which count coal producers as their largest customers -- are on a nice roll. He says that Burlington Northern Santa Fe (BNI Quote) is "hiring like crazy" to keep up with shipping demands. And he likes Canadian Pacific (CP Quote) even better because it caters to the "natural resources bread basket of the world" up north.

"Railroads should be a good place to be for the next few years," Howard said.

But Howard, who has no position in the companies he follows, draws the line at alternative energy stocks. "To me," he said, "that's just pie in the sky."