Coal-Related Stocks Will Keep Chugging Along
(Editor's Note: RealMoney is free to all TheStreet.com readers until Monday night. We hope you enjoy this article. If you would like to subscribe to RealMoney, please click here.)
The coal move must gall all of those who read the papers and understand that neither John McCain nor Barack Obama favors coal. It does seem very counterintuitive that neither
Peabody Energy
(BTU) - Get Report
nor
Arch Coal
(ACI) - Get Report
makes coal that the Democrats and Republicans can get behind.
The senators from the coal lands -- Wyoming and West Virginia -- have no clout. We don't even have
rules
dictating what coal plants we will allow! That's why I can't get behind
McDermott
(MDR) - Get Report
.
But then look at
Burlington Northern's
(BNI)
stock. Look at
Union Pacific's
(UNP) - Get Report
stock. Or
Norfolk Southern
(NSC) - Get Report
. That's coal. That's coal going overseas. That's coal going to China. Our coal is as good as any coal when it comes to the unregulated markets. Coal hasn't appreciated nearly enough to get less competitive than oil. It is much more easily transportable than natural gas.
It is the ideal transferable fuel. Always has been.
So the group's not quitting.
The only barrier to making more money for Arch and Peabody isn't emissions or the cost of shipping -- it is that cheap to ship -- it is getting at the hoards of coal we have. We are sitting on mountains of coal, but the only way to get at it is with machines, typically made by
Joy Global
(JOYG)
. The company reports next week. How this quarter is, isn't clear because of the rising cost of steel. But when you look at the lead times of its machines and the need for them, do you think it they can say anything but the business is fabulous?
My take is that the coals still work and Joy does too, ahead of next week's number.
Not a lot of ways to play coal. The ones that work? They stay strong, they stay parabolic, just like natural gas.
Maybe even better, because of the scarcity of plays and the shorts, who still lurk, I think wrongly, because of how hated, domestically, the fuel happens to be.
Random musings:
The
Financial Times
is filled with fabulous articles this morning including a terrific analysis of the Brazilian ethanol industry -- so much better with much more potent sugarcane base --- and the Moody's piece, which is priceless. ... How could S&P agree with Moody's on so many toxic pieces of junk if it didn't have the flawed software? Interesting query.
At the time of publication, Cramer had no positions in stocks mentioned.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer),"
click here. Click
here to order "Mad Money: Watch TV, Get Rich," click
here to order "Real Money: Sane Investing in an Insane World," click
here to get "You Got Screwed!" and click
here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by
clicking here.
TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.