Arch Coal Inc (ACI), Alpha Natural Resources, Inc. (ANR): Is This Coal Stock Worth the Risk?

Two, Alpha Natural Resources, Inc. (NYSE:ANR) is the only one of the three that doesn’t pay a dividend. At the same time, it’s also the only company that has a debt-to-equity ratio lower than the industry average of 1.0. This kind of fiscal responsibility may lead to Alpha Natural Resources holding up better during difficult times.

Three, Peabody Energy Corporation (NYSE:BTU)’s short position, though high, is much lower than its peers. Peabody Energy is the only company of the three that managed to increase revenue in 2012 despite such a difficult environment. However, just like Arch Coal Inc (NYSE:ACI) and Alpha Natural Resources, Inc. (NYSE:ANR), it reported a loss in 2012. On the other hand, it was the only company that delivered a profit in its last quarter.

Conclusion

The coal industry is at a crossroads, and nobody knows which road it will take next. What we do know is that natural gas prices remain historically low, Arch Coal Inc (NYSE:ACI)’s exports have slowed in the first half of the year compared to last year, and government policies have the potential to hamper the industry’s potential going forward. While an improved domestic thermal market and increased export potential due to infrastructure spending are positives, there are simply too many risks to recommend Arch Coal as an investment at this time. If you’re eager to invest in the space, consider Alpha Natural Resources, Inc. (NYSE:ANR) thanks to its stronger debt management, but only as a small speculative play.

The article Is This Coal Stock Worth the Risk? originally appeared on Fool.com.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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