Prepare to witness another dimension where nothing is as it seems. You are about to enter the coal stock twilight zone. Lying between a convoluted earnings statement and results that fail to inspire: Alliance Resource Partners (NASDAQ:ARLP).

The twilight zone begins at the earnings release, where an apparent drop in income for the second quarter is actually a 6.8% increase over the prior year, once a dizzying mix of non-recurring items is accounted for.

Before the recent explosion in coal prices, Alliance Resource Partners was a sector leader in profitability, enjoying EBITDA margins well ahead of worthy competitors such as Arch Coal (NYSE:ACI), CONSOL Energy (NYSE:CNX), and Massey Energy (NYSE:MEE). As prices for metallurgical coal remain near the $300 mark -- and could go higher still -- however, Alliance's lack of exposure to this coveted coal grade likely will allow those competitors to close the profitability gap very quickly.

This leads me to a second journey into the twilight zone. How is it, Rod Serling might have asked, that the fourth-largest coal producer in the eastern United States posts single-digit earnings growth while Fording Canadian Coal Trust (NYSE:FDG)'s profit rises by 252% and Arch Coal's earnings triple? To be sure, the lack of met coal production is a key factor, but even steam coal prices have risen more than 100% in recent months. Why, then, is Alliance Resource Partners' average sales price up only 2.3% to $39.50 per ton? For one thing, 75% of Alliance's coal production is from the Illinois basin, which sells for much less than Appalachian steam coal. Secondly, Alliance signs long-term supply contracts with domestic utilities, creating a lag between realized sales prices and rising market spot prices.

In a sector with the kind of volatility that coal has experienced recently, a conservative choice like Alliance Resource Partners may suit some Fools' tastes. For income-seeking Fools who invest by the "slow and steady wins the race" mantra, Alliance offers a 5.5% dividend, a track record of steady production and revenue growth, and a conservative strategy that is likely to work in any price environment for coal.

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