NEW YORK ( TheStreet) -- Peabody Energy ( BTU), Consol Energy ( CNX) and International Coal Group ( ICO) are three coal companies getting a lift from the current industry scenario and robust company fundamentals.

Industry analysts see coal prices breaking to the upside in a few months as Australia's devastating floods have disrupted coal production. The wet weather could push coal prices higher, boosting coal producers' profits around the world. Exacerbating the concerns, South African coal shipments have slowed down as severe monsoon rainfall has hampered transportation and logistics.

The coal shortages and supply disruptions arrive at a time when global demand is on a roll. In such a scenario, coal stocks seem to be a good buy. Daniel Rice, a fund manager at BlackRock, foresees coal stocks doubling as oil prices are close to topping $100 a barrel.

Rice is bullish on the coal sector and five of his top 10 holdings represent coal stocks. Meanwhile, FBR Capital Markets has raised its 2011 and 2012 coal prices by 9.5% and 5.8%, respectively, with steam coal prices rising on higher exports and natural gas price forecasts.

Historically, the East Coast of the U.S. and Gulf ports, which are filled with coking and crossover coking coal exports, were used minimally, but in the current scenario they seem attractive. The Gulf ports are natural export facilities for the Illinois Basin coal. Based on all these factors, JPMorgan has raised its 2011 coking coal price forecast from $211 per tonne to $220 per tonne, while seaborne thermal coal prices have been increased to $120 per tonne from $101 per tonne.

As steel demand is likely to soar to record highs in 2011, JPMorgan estimates strong international demand for coal in the upcoming months. It foresees a dramatic increase in merger and acquisition activity in the industry with foreign steel producers seeking secure coal supplies. Analysts expect U.S. coal exports could act as a safety valve, given the situation in which the flood-stricken Australian coal sector has purged coal from world markets.

Our three coal stock picks are stacked as per implied upside, great to greatest.

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