Peabody Energy Corporation (BTU), BHP Billiton Limited (ADR) (BHP): The Best Way to Play the Coal Rebound

But its Leer mine is expected to produce up to 3.5 million tonnes of high-quality metallurgical coal, up from the earlier estimates of 1 million tonnes. The increased production should allow the company to generate around $225 million in FY 2014 annual EBITDA, which could later be used to repay its debt. That may serve as a short-term trigger, but its long-term debt problems would still need to be fixed.

A short conclusion

In my opinion, BHP Billiton Limited (ADR) (NYSE:BHP) has little to offer and only contrarian investors should consider investing in the company. As far as Arch Coal Inc (NYSE:ACI) is concerned, the estimated selling price of its metallurgical coal is yet to be determined and predicting anything before that would be purely speculation. Going by the current valuations and debt levels, I’m more inclined toward Peabody Energy Corporation (NYSE:BTU).

Piyush Arora has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article The Best Way to Play the Coal Rebound originally appeared on Fool.com and is written by Piyush Arora.

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