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

Coal, Peabody Energy Are Bullish in the Long Term -- Here's Why

NEW YORK (TheStreet) -- The coal sector has taken a beating. Market Vectors Coal (KOL), the main coal exchange traded fund, and Peabody Energy (BTU), the largest publicly traded coal company, are down nearly 5% and 15% respectively for 2014. That is after a barrage of bearish news, ranging from the "war on coal" waged by the Obama Administration to Stanford University divesting from the industry.

Three recent developments, however, should have investors taking a long-term bullish position on coal securities.

First, coal continues to be a very attractive energy source based on price.

How the World Cup Has Helped Twitter

Why Twitter Shares Have Soared Over the Past Month

Blue Apron Takes On Amazon and Walmart With Unique Recipe

Stock Market Charts Are Positive, But Investors Should Beware

Oil and natural gas have surged in price. United States Oil (USO), the main ETF for oil, is up more than 10% for 2014. United States Natural Gas (UNG), the main ETF for natural gas, has risen around 18% for the same period.

As detailed in a previous article on TheStreet, oil appears to be at a permanently high price due to its new role as a safe-haven asset. The more expensive oil and natural gas are, the more alluring coal is a fuel.

Second, the big money is betting big on a commodities boom. That's bullish for coal.

A recent article in The Wall Street Journal reported that hedge funds and private equity groups are starting to buy up assets in the shipping sector. This is transpiring due to an expectation of more demand for shipping to transport commodities such as copper and coal.

That means one thing: China is buying.

China is the world's largest consumer of coal, by far. Any growth in China that results in more consumption of any industrial commodity is very positive for coal.

Third, there is an optimistic outlook from Wall Street for Caterpillar (CAT) and Joy Global (JOY), two heavy equipment companies with extensive operations in the coal industry. That too is bullish for coal.

Joy Global received a bullish recommendation by RBC Capital Markets on June 6, raising the target price from $62 to $67. The stock has jumped nearly 7% in the last month. Caterpillar is up 5% for the same period. More than 60% of Joy's sales are coal-related. Caterpillar is the largest maker of mining equipment in the world.

So how can investors take part?

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,084.13 +4.56 0.03%
S&P 500 2,001.71 +4.97 0.25%
NASDAQ 4,574.0330 +16.3380 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs