Peabody Energy Corporation (BTU), Cloud Peak Energy Inc. (CLD), Alliance Resource Partners, L.P. (ARLP): Not All Nations Have Soured on Coal

That said, Cloud Peak Energy Inc. (NYSE:CLD)’s largest Asian customer is South Korea, not China or India. So it isn’t exactly tied into that region’s coal demand growth. However, it does have an important seat at the table. So, investors looking to benefit from increasing Asian demand would do well to take a look.

Like Peabody, however, Cloud Peak Energy Inc. (NYSE:CLD) is looking at a lean year through the rest of 2013. Despite that, the company continues to work on increasing its ability to export coal from West Coast ports. And coal stockpiles at U.S. power plants are heading lower, which will eventually lead to an increase in domestic demand. So, as coal prices and demand recover, the company should be in good position to benefit. Growth will come from its increasing export efforts.

Back at home
Meanwhile, as more players look to Asia for growth, it makes sense to look at a domestically focused leader like Alliance Resource Partners, L.P. (NASDAQ:ARLP). Alliance Resource Partners, L.P. (NASDAQ:ARLP)’s coal volume was up about 13% year over year in the second quarter while realized prices were down about 7%. That combination led to yet another quarter of record results.

That’s a common theme at Alliance Resource Partners, L.P. (NASDAQ:ARLP), which has increased sales every year for a decade. While other industry players are struggling, Alliance Resource Partners, L.P. (NASDAQ:ARLP) has been a rock. And expect another record year in 2013 since management recently increased net income guidance.

The units yield around 6%, backed by a decade of annual distribution hikes. As others look to Asia, Alliance Resource Partners, L.P. (NASDAQ:ARLP) stands to gain even more market share domestically.

No money
Although it may be harder for smaller countries to fund coal utility construction as the West reduces its support, this shift is unlikely to stop China’s or India’s coal efforts. Peabody Energy Corporation (NYSE:BTU) is tied directly into Asia via its Australian assets. Cloud Peak Energy Inc. (NYSE:CLD) doesn’t have the same exposure, but is working to grow its share in the region. Alliance Resource Partners, L.P. (NASDAQ:ARLP), meanwhile, is a contrarian play on Asian demand, since it is doing well domestically and will have even more opportunity to gain share as others look to Asia for their growth.

The article Not All Nations Have Soured on Coal originally appeared on and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Alliance Resource Partners, L.P..

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