Sector Watch: Smoking Coal Stocks Hitting New Highs

As the rest of the stock market saw stock prices burn and smolder throughout the day, a soot-covered industry stuck out -- coal.

Yes, coal. The same substance that gives children heartbreak on Christmas morning and killed miners by the thousands in the 1800s. The same hard, ubiquitous nugget that accounts for more than half of the energy produced in the United States -- more than oil, gas, nuclear, wind and hydroelectric power combined. It seems that some investors have turned back the clock. The Dow Jones U.S. Coal Index was the only notable winner among a field of losing sectors today, gaining 6%.

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TheStreet.com's Tom Lepri recently took a look at this hot area of the economy. It's time to get on speaking terms with companies like Arch Coal (ACI Quote), Alliance Resource Partners (ARLP Quote), Consol Energy (CNX Quote), Massey Energy (MEE Quote), Westmoreland Coal (WLB Quote) and, of course, Yanzhou Coal Mining (YZC Quote).

The catalyst for today's gains: A lousy broad market and the fact that Arch, the second largest coal producer, this morning announced that first-quarter earnings would come in between 10 cents and 15 cents a share. That's a huge gain over the current analysts' consensus estimate of 4 cents a share. The news was the spark.

Arch gained 5.5% to $29.44 as a result of the positive announcement -- and earlier today hit a 52-week high. Arch's news stood in sharp contrast to the pair of warnings from Palm(PALM Quote) and Nortel(NT Quote), which were dragging both the Dow and the Nasdaq lower. Arch said that nearly all its mines, located in such exotic locales as West Virginia and Wyoming, are operating at high levels of productivity.

The market for coal continues to stay strong as demand for power continues unabated. That's a growth story -- one of the few investors have heard lately. Arch is the biggest publicly traded coal company. The largest overall, Peabody Holdings, is privately held by Lehman Brothers. On Valentine's Day, the investment bank filed with the Securities and Exchange Commission to take Peabody public.

Alliance, which owns six mining complexes in Illinois, Kentucky and Maryland, also hit a 52-week high today. It lately was trading 4.5% higher to $20.19. It was one of the biggest gainers on the Nasdaq. Granted, that's not saying very much, but it is notable.

Consol Energy, the third-largest coal company with 22 mining complexes in the U.S. and total production of 73 million tons, recently jumped 13.1% to $36.20 -- and, yes, it too hit a 52-week high today. Germany's massive RWE (RWEOY Quote) conglomerate owns 74% of the company.

Massey, based in Richmond, Va., gained 7.5% to $23.65, trading just below the new high it hit earlier. These guys have $1.9 billion in coal reserves and 18 mining complexes, in addition to making synthetic fuel and selling timber, gas and oil rights to third parties. Massey, however, might be held legally responsible for the close to 230 million gallons of coal slurry that made its way into Kentucky's Big Sandy River last year. Whoops!

Rounding out the winner's circle was Westmoreland Coal, with a 14.8% gain that brings it to $14.75, yes, just off a 52-week high hit earlier in the day. And don't forget about China's Yanzhou Coal Mining, which rose 5% to $17.75.

For TheStreet.com's earlier look at sectors on the move today, check out Nortel Wreaks Havoc on Telecom.