Glowing Prospects in the Coal Sector

Australian coal investments are now very attractive. While the talks between Xstrata and Vale(RIO) about merging have officially ended, the interest in Australian resource stocks still continues.

The next wave of acquisitions may be midsized Australian coal companies. Just last week, ArcelorMittal(MT), the world's largest steelmaker, acquired 14.9% of Macarthur Coal.

Other midsized Australian coal producers to consider are Felix Resources and New Hope, which both sport market values of under $5 billion.

3) Invest in a coal ETF for broader exposure.

In the U.S., the ETF for coal stock investing is Market Vectors Coal(KOL), a 39-stock fund that represents the companies engaged in the coal industry worldwide. With a small 65-basis-point expense ratio, it is an efficient way to get exposure to the global coal business.

Among other things, this fund holds mining equipment and service companies such as Joy Global(JOYG), Walter Industries(WLT) and Bucyrus International(BUCY).

In closing, the outlook for coal has changed dramatically in the last three to four months. Invest in coal stocks as a core part of a long-term portfolio -- especially now that the sector is just entering a global cyclical upturn. It looks like a timely opportunity.

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