Duke Energy Corp (DUK), American Electric Power Company, Inc. (AEP), Alpha Natural Resources, Inc. (ANR): Reliability Ensures Coal’s Future

That’s one reason why you might prefer Cloud Peak Energy Inc. (NYSE:CLD), which is almost exclusively focused on thermal coal from the PRB. While Alpha Natural Resources, Inc. (NYSE:ANR) has lost money in eight of the last 10 quarters, Cloud Peak has actually been in the black for the past two and a half years despite coal’s malaise. The second quarter was its weakest, with earnings of just $0.08 a share.

While that’s not a good sign, cost savings and utilities increasingly burning down their PRB coal inventories suggest 2014 could be a much better year. That’s particularly true if natural gas prices remain at recent levels.

Diversification

Natural gas is clearly the fuel source of the future in this country. However it is premature to call the death of coal. It is far more likely that coal will simply have to share the limelight. Utilities like American Electric Power Company, Inc. (NYSE:AEP) and Duke Energy Corp (NYSE:DUK), valuing diversified power portfolios, will benefit from natural gas’ rise and from fighting for coal’s future. In fact, that’s why Duke Energy Corp (NYSE:DUK) brought a newly constructed advanced coal plant online in June.

Coal companies, meanwhile, will have to deal with a more competitive utility market, with some coal basins being favored over others. And the increased use and supply of natural gas will increasingly operate as a key factor in coal’s pricing and demand. That just means that companies like Alpha Natural Resources, Inc. (NYSE:ANR) will have to adjust quickly to a new world while better positioned companies like Cloud Peak Energy Inc. (NYSE:CLD) appear to have an important head start.

The article Reliability Ensures Coal’s Future originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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