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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

4 Bargain Coal Stocks, If You Dare

NEW YORK (Stockpickr) -- Roughly a decade ago, gutsy investors were able to profit from the "tobacco trade," snapping up tobacco stocks even as the long-term picture grew more challenging. These investors knew that the tobacco stocks still posted hefty cash flows -- and sported impressive dividend yields -- despite the social stigma against them.

Well, the "tobacco trade" is back on, though this time around, it's called "the coal trade." Coal-mining stocks are being shunned as investors focus more squarely on oil and gas stocks.

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Yet the sector valuations are stunning. And unlike tobacco, which may one day be legislated out of existence, coal isn't going anywhere. Case in point: China builds a new coal-fired power plant every week.

More to the point, you want to invest in coal stocks when demand exceeds supply, as reflected by coal inventories. As analysts at Sterne Agee recently noted: "Despite tepid electricity generation, very competitive natural gas prices, and a high level of uncertainty regarding the eventual net coal-fired plant retirement, user inventories have been declining. Our supply demand forecast through 2013 suggests further pressures on stockpiles, a continued mix shift in Btu consumptions and cyclical pricing for U.S. thermal and metallurgical coals."

The key for investors is to focus on the best values in the group. Here are four names that you should be focusing on, if you have the temerity to pursue "the coal trade."

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