Can 'Big Coal' Dig Out of its Hole?

NEW YORK (TheStreet) -- Several large coal companies are once again laying it on the line. Coal has cooled off from low-priced natural gas competition. United States Natural Gas Fund ETF (UNG) tracks the price of natural gas and is an easy way to get an idea of natural gas price direction.

I included the three biggest coal companies reporting in the next few weeks: Arch Coal (ACI), Peabody Energy (BTU), and  Alpha Natural Resources (ANR).

Between government regulations and the low price of natural gas, coal is out of favor. Fortunately, Asia and Europe continue to import coal from North America, although not in the quantities miners would prefer. The exports help to support pricing as orders from power plants wane.

UNG data by YCharts

Up until the fall in natural gas prices, coal was the number one fuel source for electric power plants. With natural gas prices moving higher off the lows last month, some shifting back to coal as an energy source should be anticipated.

Until new power plant construction increases, coal prices will remain under pressure. Obviously, the election coming up will have a large influence on permits and the Environmental Protection Agency.

ANR data by YCharts

Alpha Natural Resources.

Background: The company was founded in 2002 and is based in Abingdon, Va. Alpha Natural trades an average of 16.7 million shares per day with a market cap of $1.7 billion.

52-week high: $47.12, 52-week Low: $7.43, book value: $33.64, float short: 9.31%

Investors are anticipating Alpha Natural to report weak second-quarter earnings on Aug. 8. The consensus estimate is currently for a loss of 25 cents a share, a decline of $1.21 from 96 cents during the same period last year.

Over half the analysts covering Alpha Natural rate it as a buy or strong buy; 13 of the 19 analysts covering the company give a "buy" recommendation, five analysts rate it a "hold" and 1 recommends selling.

Enthusiasm from analysts is falling; 13 out of 19 analysts now rate Alpha Natural a "strong buy" down from 14 analysts a month ago. Compared to three months ago, fewer analysts are rating this company as a "strong buy." The average analyst target price for Alpha Natural is $20.72.

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