Peabody Energy Corporation (NYSE:BTU) isn’t the only company with access to export markets. Arch Coal Inc (NYSE:ACI) for example also has coal export deals with Kinder Morgan while Alpha Natural Resources, Inc. (NYSE:ANR) has tremendous access to the export markets. The difference here is that all of Peabody Energy Corporation (NYSE:BTU)’s reserves are in the lower-cost Powder River and Illinois basins, while both Arch Coal Inc (NYSE:ACI) and Alpha Natural Resources, Inc. (NYSE:ANR) have higher-cost Appalachian coal operations which cut into margins. That’s why I think Peabody Energy Corporation (NYSE:BTU) really has an advantage here because when you combine its low-cost coal reserves with its access to export markets, as well as its Australian coal operations, it has all the makings of a really good stock to invest in relative to these peers.
If you can’t beat them, join them: CONSOL Energy Inc. (NYSE:CNX)
The reason why coal has been under so much pressure in the U.S. is that natural gas is pushing its way into coal’s core electricity market. This is where CONSOL Energy Inc. (NYSE:CNX)’s diversification into natural gas gives it a leg up because it can benefit from increased natural gas demand by utilities. Because of current market conditions, CONSOL Energy Inc. (NYSE:CNX) is all but abandoning its efforts to grow coal production in the future and instead will look to grow its gas business by double digits.
CONSOL Energy Inc. (NYSE:CNX) is still a top-tier coal miner; it has some coal growth ahead thanks to its soon to be finished BMX Mine, which is expected to deliver 5 million tons of coal per year. Further, the company has access to export capacity through its 100%-owned Baltimore terminal which is undergoing an expansion of its capacity to 16 million tons. The bottom line here, and what makes CONSOL Energy Inc. (NYSE:CNX) a good stock to invest in, is its balanced approach which, when combined with its strong balance sheet, really sets it apart.
Final Foolish thoughts
Of the two, I think Peabody is the company worth digging deeper into first as its Australian operations really give it a major competitive advantage. While I like that CONSOL Energy Inc. (NYSE:CNX) is diversified, natural gas is also a pretty cheap commodity these days which doesn’t help margins very much. Further, coal from Baltimore has a much longer journey ahead of it to reach Asia than does coal from Australia, which is a good reason to dig deeper into Peabody’s stock as a potential investment.
The article 2 Good Coal Stocks to Invest In originally appeared on Fool.com.
Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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