The Coal Industry is Not Leaving
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Aug
29
Jonathan Yates
The Coal Industry is Not Leaving
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Even though the efforts of The Obama Administration seem to be focused on that goal, the coal industry is not going away.  There will certainly be many individual coal companies that do go out of business, however.  But Peabody Energy, (NYSE: BTU), and the exchange traded fund for coal, Market Vectors Coal (NYSE: KOL), should offer future gains for investors due to the current woes of the industry, although both are off for the year as shown by the chart below.

A recent article in Barron’s by Jacqueline Doherty detailed the long term appeal of Peabody Energy.

In her Barron’s piece, “Peabody is Set to Get Fired Up,” Doherty reported on how could double in price.  That would be a nice change for its shareholders, as Peabody Energy is down more than 30% for 2013.  This week, however, Peabody Energy is up almost 8%.  Much of that can be attributed to the Barron’s effect, of course.  But the assets of Peabody Energy make it an attractive buy for the long term.  In addition, there is a dividend yield of almost 2% that pays investors to wait.

Like Peabody Energy, Market Vectors Coal is down for 2013, too.

As an exchange traded fund, it holds most of the assets of major coal companies.  Not all will go bankrupt.  As a result, Market Vectors Coal should rise again.  The KOL has risen in recent market action too, like other coal securities.

Coal still provides most of the energy for the world.  It is much easier to use than others such as natural gas or oil.  When China, the world’s largest user, and India recover economically along with others, so shall the price of call; and the share prices for Peabody Energy and Market Vectors Coal.

 



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