Out Fox The $treet

Though the coal sector continues to struggle due to plunging prices, the news isn't all bad for the sector. In fact, the confluence of information from Peabody Energy ( NYSE: BTU     ) suggests that a turn is all but certain. For domestic coal investors, Peabody Energy provides the best insight into the global commodity with mines in both the U.S. and Australia along with customers on six different continents. The industry news is consistent with the information doled out by Arch Coal ( NYSE: ACI     ) a few days ago. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After another weak earnings report, it appears that Arch Coal ( NYSE: ACI     ) may never regain momentum. The coal miner can't seem to catch a break with domestic thermal coal demand improving, but the high dollar metallurgical coal market plunging to new lows. Arch Coal remains one of the largest domestic coal producers with a target of selling at least 130 million tons during 2014. Unfortunately, a rebound in one segment is being met by a loss in another segment. The company is suffering substantial losses, bringing up doubts of whether a strong enough rebound will occur. Read the full article here . Disclosure: Long ANR. Please review the disclaimer page for more details. 

With Bank of America issuing a negative report on metallurgical coal, Walter Energy ( NYSE: WLT     ) slumped 20% on the news. The analyst was also bearish on other met coal producers including Alpha Natural Resources ( NYSE: ANR     ) and Arch Coal ( NYSE: ACI     ) . Typically a beaten down stock would grab some interest in the market, but in the case of Walter Energy, recent debt financings and weak prices for met coal make it questionable whether the stock will rebound. Walter Energy is the largest pure play, met coal miner in North America with operations primarily in Alabama and Canada. The stock was a poster child for the booming commodity sector back in 2011 when it soared to over $140 on relentless demand from China. Now, the stock has a prominent firm placing a $2 target on the stock. Read the full article here . Disclosure: Long ANR. Please review the disclaimer page for more details. 

After weak met coal guidance from Alpha Natural Resources ( NYSE: ANR     ) and Arch Coal ( NYSE: ACI     ) , Walter Energy ( NYSE: WLT     ) surprised the market with bullish commentary on the coal needed for steel production. Walter Energy is the largest pure-play met coal miner trading on the domestic stock exchanges. After closing another thermal coal mine, the company expects to only produce 300,000 tons of thermal coal this year, leaving the sole thrust on met coal. Other domestic coal miners produce met coal along with sizable amounts of thermal coal used for electricity production. Read the full article here . Disclosure: Please review the disclaimer page for more details. 

The biggest beneficiary of plunging natural gas inventories might not be a company in the natural gas industry. The coal industry took a big hit due to the suddenly abundant and cheap energy source developed over the last decade. Coal stocks are arguably among the most hated stocks on the planet. Stocks such as Peabody Energy ( NYSE: BTU     ) and Arch Coal   ( NYSE: ACI     ) will benefit, however, the most from a switch back to coal as a fuel source for electricity production. Alpha Natural Resources ( NYSE: ANR     ) might provide the most upside, especially if investors see a global rebound that increases the demand for metallurgical coal used in steel production. In general, the sector has been crushed so much in the last couple of years that any snap-back in demand will raise all the stocks in the sector. Read the full article here . Disclosure: Long ANR. Please review the disclaimer page for more details. 

Alliance Resource Partners, L.P. ( NASDAQ: ARLP     ) might have the best set of coal assets for the current regulatory environment. The company engages in the production and marketing of coal and operates 11 underground mining complexes in the Illinois Basin, Central Appalachian, and Northern Appalachian regions. The key to success is the lower costs of the Illinois Basin coal that has a cost advantage now that electric utility scrubbers allow for the use of the high-sulfur coal to meet EPA regulations. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After another week of bearish natural gas reports, most coal stocks were hit by negative analyst reports. Even though a lot of the news suggests a more bullish environment for coal, the market isn't finding the stocks appealing. The quarterly coal report from the EIA and the weekly natural gas inventory report should remind investors that not only is coal still alive, but it could have a surprisingly strong future. Domestic focused producers in the Western U.S. and Illinois Basin will benefit the most, providing some upside potential for Cloud Peak Energy ( NYSE: CLD     ),  Arch Resources ( NYSE: ACI     ), and Alpha Natural Resources ( NYSE: ANR     ). Read the full article here . Disclosure: Long ANR. Please review the disclaimer page for more details. 

After reading the quarterly report for Peabody Energy ( BTU ), one has to wonder if the coal supercycle is back. A few years back the CEO proclaimed that coal had begun a long-term surge in demand yet the stock began a major slump as new mines and higher costs caused profits to plummet. As US investors remain focused on last year's domestic switch to natural gas from thermal coal, the global demand for coal remains as strong as ever. One major theme highlights the global demand picture for coal. Where alternative fuel prices are cheap, consumers prefer that source whether natural gas, nuclear, or alternative fuels. In the cases where alternatives don't exist or are no longer deemed appealing, coal demand is set to grow dramatically. The situation in the US is incorrectly framed as a preference for a cleaner alternative to coal, but the scenario might see a dramatic shift as natural gas prices soar in 2013. Read the full article at Seeking Alpha. Disclosu...

he recent floods in the state of Queensland in Australia have ravaged the operations of coal mines, specifically those that mine coking coal. Queensland produces roughly 90% of the coking coal in Australia, so that's a huge impact to the global trade of this commodity. According to this report from  Mining Weekly ,  some of the flooded mines, especially open pit mines, could be off line for up to 6 months. It's still early in the process, but it'll be interesting to see how this will play out on demand and pricing. See the rest of the article at Seeking Alpha . 

According to the WSJ , Massey Energy (MEE) is reviewing a buyout offer from Alpha Natural Resources (ANR). Oddly though the title of the article currently says Arch Coal (ACI) instead of ANR. For the last couple of weeks, its been speculated that MEE was on the auction block. MEE is a major holding of our Opportunistic and Growth portfolios since the stock swooned down to the $30 area following the mine explosion in April. The stock is up roughly 12% to $47 providing for a major gain already so any large premium over this level would be sweet. Unfortunately, these portfolios are also heavily invested in ANR so a buyout by them would likely dilute the gain as their stock will possibly drop similar to todays reaction where MEEs gain has doubled ANRs loss. Still very positive, but naturally we'd prefer another suitor over ANR. Since ANR has a lot of similarities to MEE especially the US met coal production and reserves and outside buyer would also drive up their price. Oh well, ...