BHP Billiton Limited (ADR) (BHP), Peabody Energy Corporation (BTU), Arch Coal Inc (ACI): For Coal Miners, Is India the New China?

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Peabody Energy Corporation (NYSE:BTU)’s stock hasn’t fared very well over the past couple years, but the company is not a lost cause. The firm has mines in Australia and trading offices in Indonesia. These assets place it close to the Indian import market. Still, the falling price of coal coupled with Australia’s high costs forced the company to cut 450 Australian jobs in 2012.

Don’t Ignore Peabody

As India becomes more important to coal miners, Peabody is in a better position than Arch Coal Inc (NYSE:ACI). Peabody Energy Corporation (NYSE:BTU)’s Australian mines and Indonesian operations place it very close to Asia, while Arch Coal Inc (NYSE:ACI) is stuck shipping its coal all the way from the United States.

Peabody Energy Corporation (NYSE:BTU)’s profit margin -9.9% and earnings before interest and taxes (EBIT) margin of -0.9% need to improve, but they are better than Arch Coal Inc (NYSE:ACI)’s profit margin of -19.1% and EBIT margin of -19.9%. Also, Peabody Energy Corporation (NYSE:BTU)’s total debt to equity ratio of 1.26 is better than Arch Coal Inc (NYSE:ACI)’s total debt to equity ratio of 1.84.

Conclusion

India faces a steady coal short fall and its demand for imports will help to save miners. Mining giant BHP Billiton Limited (ADR) (NYSE:BHP) is not a growth stock, but it is an attractive dividend play with a yield around 4%. Unlike Arch Coal Inc (NYSE:ACI), Peabody Energy Corporation (NYSE:BTU) is a good turnaround play. The company has assets close to India and other Asian coal buyers, while Arch Coal Inc (NYSE:ACI) is stuck mining all of its coal in the United States.

The article For Coal Miners, Is India the New China? originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy owns shares of Peabody Energy. The Motley Fool has no position in any of the stocks mentioned. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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