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After reaching five-year highs this week, stocks in the S&P 500 Index (SNPINDEX: ^GSPC ) were almost exactly sideways on Friday. Investors struggled to reconcile an expanding domestic trade deficit with an improving Chinese economy facing inflation concerns. While the S&P was down less than 0.1%, three companies stood out as laggards today in the index.
Coal conglomerate Peabody Energy (NYSE: BTU ) fell hard today, stumbling 5.4%. The last year -- which has seen the surge of natural gas as a viable energy alternative -- has been even more painful for Peabody investors. Much of natural gas' appeal comes from its declining price, which fell more than 50% from 2008-2011. Peabody stock has cratered 32% in the past year.
But it wasn't just Peabody that suffered from price competition in energy. Cliffs Natural Resources (NYSE: CLF ) , another coal miner that also produces iron ore, fell 4.1% on Friday. With natural gas remaining more efficient and reliable than renewable energy sources like wind and solar, and cleaner than coal, it's getting tougher to compete against. An International Renewable Energy Agency director even said bluntly that gas "is going to displace coal."
United States Steel (NYSE: X ) was the third big underperformer in the Index today. Despite having a dividend (0.8%) far lower than Cliffs (6.6%), and meaningfully below Peabody (1.3%), U.S. Steel fell 3.3% on a weak day for metals and minerals. Although the high dividend from Cliffs may, on the face of it, make it look like a more attractive option, investors worry that the high income that Cliffs pays out amounts to an unsustainable model. Meanwhile, if American industry rebounds substantially in 2013, U.S. Steel should benefit and recover nicely.
Cliffs Natural Resources has grown from a domestic iron ore producer into an international player in both the iron ore and metallurgical coal markets. It has performed well relative to many competitors, in a very cyclical industry, because of several factors that are likely to remain advantageous for Cliffs' management. For details on these advantages and more, click here now to check out The Motley Fool's brand new premium report on the company.