Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, coal producer Alliance Resource Partners, L.P. (Nasdaq: ARLP) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks woefully lag the market average.
With that in mind, let's take a closer look at Alliance Resource's business, and see what CAPS investors are saying about the stock right now.
Alliance Resource facts
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Headquarters (founded)
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Tulsa, Oklahoma (1971)
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Market Cap
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$1 billion
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Industry
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Coal
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TTM Revenue
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$1.1 billion
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Management
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CEO Joseph Craft, III (since 1999)
CFO Brian Cantrell (since 2005)
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Return on Capital (average, last three years)
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25.6%
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Dividend Yield
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9.5%
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Competitors
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Arch Coal (NYSE: ACI),
Peabody Energy (NYSE: BTU)
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CAPS members bullish on ARLP also bullish on:
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Chesapeake Energy (NYSE: CHK),
Freeport-McMoRan Copper & Gold (NYSE: FCX)
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CAPS members bearish on ARLP also bearish on:
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Frontline (NYSE: FRO),
Abercrombie & Fitch (NYSE: ANF)
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Sources: Capital IQ (a division of Standard & Poor's), and Motley Fool CAPS. TTM = trailing 12 months.
Over on CAPS, 444 of the 457 members who have rated Alliance Resource -- or 97% -- believe the stock will outperform the S&P 500 going forward. These bulls include kjrobbins and beegdawg007.
Last month, kjrobbins described Alliance as a "Well run, and well priced coal company that should move up as energy rebounds, and its paying a great dividend."
In a more extensive pitch from two days later, beegdawg007 elaborates on that bullish attitude. Below is a small sampling, but be sure to check out the entire analysis:
[Allied Resource Partners] is one of the greatest sleeper stocks ever because this is really an incredibly misunderstood opportunity. At $27, this stock is trading at less than 4 times next years earnings. In addition, [Allied Resource Partners] could actually pay a $5 to $6 dividend in 2009. [Allied Resource Partners] , a coal mining company, now has 92% of its 2009 sales and 80% of its 2010 coal sales "under contract" with U.S. power companies.
... There is no way to quickly reduce the amount of electricity produced in the US with either wind or solar. ... In fact, the DOE sees the use of coal in the US to continue to grow through 2030. But, regardless of your beliefs about this the reality is that most of the coal sales for [Allied Resource Partners] for 2009 and 2010 are already under contract and over half of 2011 is under contract.
What do you think about Alliance Resource, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.
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