The past year has been brutal for coal, and the nation's coal stocks have taken an absolute beating. There are a variety of factors behind coal's downfall, with a major reason being depressed natural gas prices that have caused utility customers to switch from coal to natural gas.
The past year has brought steep drops in share prices of major coal producers, including CONSOL Energy Inc. (NYSE:CNX) and Alpha Natural Resources, Inc. (NYSE:ANR), as their business conditions deteriorate.
With all this in mind, many investors may believe the entire coal business model is in jeopardy. However, it just so happens that there's one coal stock that's not only surviving the current environment, but thriving, and represents a fantastic buy.
Most coal companies are struggling mightily Alpha Natural Resources, Inc. (NYSE:ANR) is simply in serious trouble. This was a $43 stock three years ago, but has lost more than 80% of its value since then. The company's fundamentals have deteriorated for many quarters in a row. Alpha Natural Resources, Inc. (NYSE:ANR) reported a second-quarter loss of $185 million, or $0.84 per share.
In its most recent quarter, Alpha Natural Resources, Inc. (NYSE:ANR)'s business saw declines in every relevant metric for a coal company. Its margins and volumes collapsed. In the most recent quarter, Alpha Natural Resources, Inc. (NYSE:ANR) realized a margin of $2.72 per ton of coal it sold. That compares to a margin of $6.57 per ton in the same quarter last year.
Coal volumes sold fell a staggering 19%. All told, these factors combined to result in a 28% drop in quarterly revenue.
CONSOL Energy Inc. (NYSE:CNX), meanwhile, has admittedly fared better than many of its suffering coal competitors. Shares exchange hands for $33 per share, down from $40 per share one year ago. While a 17% drop is nothing to brag about, it's at least measurably better than Alpha Natural Resources, Inc. (NYSE:ANR)'s share price performance in recent years.
CONSOL Energy Inc. (NYSE:CNX)'s better performance is due to its more diversified operations, as CONSOL isn't a pure coal company. Instead, it operates in gas as well.
Unfortunately, this didn't stop CONSOL Energy Inc. (NYSE:CNX) from losing $13 million in its second quarter, compared to a $153 million profit in the same quarter last year. It's true that last year's quarter benefited from gains from asset sales, but CONSOL Energy Inc. (NYSE:CNX) still took a step backward.