This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Coal Stocks: A Year in Review

NEW YORK ( TheStreet) -- To say 2013 was a dark year for coal companies would be a gross understatement. The entire industry was off 18% on the year; disappointing, but hardly representative of the bloodbath that occurred when looking at individual performances.

The industry's 2013 performance, highlighted by a 42% stock price decline from Arch Coal (ACI - Get Report), marked a 7% improvement from three years ago when the group shed more than 24%. While this high-risk commodity business surprised no one with its struggles, I don't believe anyone anticipated that the 29% decline in Peabody Energy (BTU - Get Report) stock would have been considered a "relative outperformance."

Notice how coal aficionados hold their convictions. Despite negative momentum within the industry, many investors, including those in Liberty Coal (LYRTF) and Colombia Energy (CERX), stubbornly rode their investments down to 100% declines, insisting that "the Street had gotten it wrong."

While trying to "time the bottom," some investors learned the brutal lesson that things can always get worse.

Unlike the underlying operational struggles that have hurt its peers, I believe Alpha Natural Resources (ANR) has the management in place to capitalize if/when coal gets out of this funk. And this includes having posted gains of more than 50% since August. But I'm not going to make the same mistake and assume that Alpha Natural is immune to the industry's woes. This company still has issued related to debt that it must overcome.

That said, as with anything else, I believe the timing is right, given the fact that not only does domestic thermal coal inventories continue to trend down, but there are also decent (I won't say great) advances in metallurgical coal. Not to mention, Alpha Natural will enter 2014 trading at or near its all-time lows.

Obviously, I can be wrong here. Lacking a crystal ball, there is no way to know where the market will go in 2014. But here we have modest evidence of a coal recovery, coupled with a depressed stock that just posted sequential improvement in revenue. If that is not the recipe for a good bet, I don't know what is.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
ACI $0.18 0.00%
BTU $1.20 0.00%
AAPL $121.30 0.00%
FB $94.01 0.00%
GOOG $625.61 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs