Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, coal producer Alliance Resource Partners L.P.
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
| Headquarters (Founded) | Tulsa, Okla. (1971) |
| Market Cap | $2.25 billion |
| Industry | Coal and consumable fuels |
| Trailing-12-Month Revenue | $1.5 billion |
| Management |
CEO Joseph Craft III (since 1999) CFO Brian Cantrell (since 2005) |
| Return on Capital (Average, Past 3 Years) | 18.6% |
| Cash/Debt | $20.3 million / $422.5 million |
| Dividend Yield | 5.4% |
| Competitors |
Arch Coal
CONSOL Energy
Peabody Energy |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 97% of the 588 members who have rated Alliance Resource believe the stock will outperform the S&P 500 going forward. These bulls include KnockoutMouse and DanFPilot.
Just last month, KnockoutMouse tapped Alliance Resource as an attractive way to earn some income: "Strong balance sheet, free cash flow adequate to fund its dividend, and well managed debt. ... [Alliance Resource] is a good inflation fighting stock, coal may not be very politically correct but I don't see it going away any time soon."
As the coal industry's only publically traded master limited partnership (MLP), Alliance Resource is often viewed as a relatively safe way to bet on the black stuff. Not surprisingly, the stock's current dividend yield (5.4%) is substantially higher than that of coal giant rivals Arch Coal (1.4%) and Peabody (0.6%), as well as other coal plays like CONSOL (1%) and Massey Energy
CAPS member DanFPilot elaborates on the income opportunity:
The payout ratio is modest, the company is growing and they are required to pay out due to the fact that they are a MLP. With the push for electric cars, there will need to be more coal, a lot more since coal fires about fifty percent of American powerplants. ... Also it seems that investors are heading for dividend paying equities. Yields on bonds and CDs just are not very good.
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