While Obamacare is not off to an auspicious beginning, the “War on Coal” of The Obama Administration has certainly been effective in lowering the price of securities in the coal industry.
The exchange traded fund for coal, Market Vectors Coal (NYSE: KOL), is down nearly 20% for the year.
Individual stocks in the sector have been hammered, too. Alpha Natural Resources (NYSE: ANR) is off by nearly 40% for 2013. Over the same period, James River Coal (NASDAQ: JRCC) is down by more than 35%. Cliff’s Natural Resources (NYSE: CLF) has also dropped around 40%. Patriot Coal filed for bankruptcy last year.
For contrarian investors, the coal industry could be appealing, over the long term.
Coal is still the most widely used fuel source in the world. That is especially so for emerging market nations. In these countries such as China, India, and others, coal is the main supplier of power.
For investing in the sector, investors should buy a wide portfolio of stocks, or even Market Vectors Coal.
It is still treacherous times in the coal sector. That will not change until the end of The Obama Administration. But, outside of the United States, demand is growing. But, as the chart below shows, Market Vectors Coal has rallied in recent market action. There could be more recovery in the sector in the years ahead that rewards investors with a long term horizon and tolerance for risk.