Along those same lines, I have to believe that both Peabody Energy and Arch Coal will see some modest gains next year given that they are the two leaders in terms of U.S. coal production. They should enjoy the benefits of government contracts that likely eluded them this year.
While I'm not as infatuated with Peabody and Arch as I am with Alpha Natural, I don't envision any recovery that does not immediately benefit either company. Arch Coal has come under criticism for recent performances, but I was nonetheless pleased with management's improved profitability, even if the result was a $2 million loss. Relative to the prior quarter's loss of $60 million, I don't think it's fair to complain.
Finally, I would be remiss without having mentioned CONSOL Energy (CNX), which has posted 17% year-to-date gains. With the company's ambitions of entering natural gas, management seems discontent with CONSOL's already-established elite status.
The company has already closed a $3.5 billion deal to offload its West Virginia coal mines. And CONSOL has begun to work with Dominion Resources (D) and Noble Energy (NBL) to acquire drilling rights to natural gas fields. Management is not wasting any time to escape a coal industry that has left behind so much carnage. Who can blame them? The only question is: How quickly they can execute to realize the sort of value they envision returning to shareholders?
Coal has never been as sexy as, say, technology or banking. But I believe what has occurred in this industry the past couple of years is on par with the tech bubble and credit crisis. Unlike those sectors, coal has been depressed for the better part of a half decade. Will there ever be a recovery?
Coal mining has always been considered a hazardous business. But investing in it has proven equally dangerous. As with CONSOL, there will be some winners in 2014. I believe Alpha Natural, Arch Coal and Peabody will be relative outperformers. But wear protective gear and a hard hat before you buy.
At the time of publication, the author held no position in any of the stocks mentioned.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.