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Follow Henry Hub for Big Coal Profits

Since Sept. 10, the price of natural gas at the Henry Hub distribution center in Louisiana has climbed 20% from its close of $2.66 a month ago. Following this rapid rise, coal companies have seen their shares appreciate, reversing some of the downward price movement they have experienced for the better part of 2012. 

Up until the second week of September, natural gas prices had remained well below $3/MMBtu. This had prompted many power generators, such as Exelon (NYSE: EXC  ) and Edison International (NYSE: EIX  ) to shed some of their coal-fired assets in order to take advantage of the lower-cost alternative. This reduced demand punished coal companies. Their bounce over the past month could continue whether we run into colder winter weather than last year, which would eat into the inventory surplus we are currently experiencing.

Keep an eye on your thermometers and November's election to get a good gauge on where these companies could be headed in both the near and long term. 

With the swelling of the global middle class, energy consumption will skyrocket over the next few decades, and long-term investors know that you want exposure to this space now. Exelon could present a rare "double-play" investment opportunity today. We're calling it The One Energy Stock You Must Own Before 2014, and you can uncover it today, totally free, in our premium research report. Click here to read more.

Joel South, Taylor Muckerman, and The Motley Fool have no positions in the stocks mentioned above. Motley Fool newsletter services recommend Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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