Coal as a sector caught fire early in 2008, but then burned a hole through many investors' portfolios, as mining stocks snapped back with a vengeance. For the intrepid investor willing to hold an ember, however, I believe the sector offers substantial upside potential.
I'll admit that Massey Energy
Massey's earnings disappointed the analysts, but not this Foolish shareholder. Its $53.6 million in net income for the fourth quarter, along with a 63% improvement in EBITDA to $148.8 million, marked an operational success that its battered share price doesn't seem to reflect. Massey's operating cash margin improved by 69% to more than $13 per ton. Competitor Alpha Natural Resources
Of all the deep-value prospects within the embattled coal-mining sector, I would not list Massey among my top picks. Given allegations of environmental transgressions and legal battles over the company's practice of mountaintop removal, I believe Massey is an easy target for potential regulatory changes. Furthermore, the company's $250 million settlement of another court case drained substantial liquidity at a most inopportune time.
With far less exposure to the unpopular surface mining practices of fellow Appalachian coal miners, CONSOL Energy