Walter Energy, Inc. (WLT), Peabody Energy Corporation (BTU), BHP Billiton plc (ADR) (BHP): Is This Miner a Buy After Coal Acquisition Writedown?

Mining giant BHP Billiton plc (ADR) (NYSE:BHP), meanwhile, provides even more diversification. It has been focusing on iron ore, petroleum, copper, and coal, giving it the ability to shift investment dollars to the areas that have the best growth prospects, propping up the weakest areas with the strongest.

For example, while iron ore and coal are currently weak, oil prices remain strong. Because of this diversification the company has been profitable for the past decade. As an example, the company wrote off nearly $3.5 billion related to its natural gas and nickel assets in fiscal 2012, a year in which it still earned nearly $3.00 a share. Although the company reported weak fiscal 2013 results, BHP Billiton plc (ADR) (NYSE:BHP) might be the best option for risk averse investors looking for exposure to coal.

And, despite the weak markets and notable earnings drop between 2012 and 2013, the company was soundly in the black. When coal picks up it will likely be accompanied by an uptick in iron ore, which will provide a double boost to earnings.

All in

Walter Energy went “all in” at the wrong time and shareholders have paid the price. The shares are still too risky. Peabody Energy Corporation (NYSE:BTU), which also wrote down coal assets, is a better pure-play choice. For even more risk averse investors, however, BHP Billiton plc (ADR) (NYSE:BHP) is probably the best option because of its diversified portfolio and massive scale.

The article Is This Miner a Buy After Coal Acquisition Writedown? 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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