1 Metric That Should Terrify Investors in These 3 Coal Stocks

Being an investor in Alpha Natural Resources (NYSE: ANR  ) , Arch Coal (NYSE: ACI  ) , and Walter Energy (NYSE: WLT  ) has been nothing but discouraging for the past couple of years.

ANR Chart

ANR data. Source: YCharts.

However, all three have gone from just discouraging to flat-out concerning. Not only are they not generating any returns for shareholders, but they aren't even generating enough of a return on its coal contracts to pay the interest payments on their debt. 

With EBITDA-to-interest expense ratios dropping below 1 and the market for coal continually looking weak, these companies will need to rely on their cash hoards to cover payments for the foreseeable future. Find out how long these companies can hold out for better days by tuning into the video below. 

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Read/Post Comments (5) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On April 03, 2014, at 12:36 PM, Peter405 wrote:

    Please do NOT despair; these types of feelings get intense at bottoms.

    ACI has started a long term bull market ( as confirmed by the Golden Cross- a reliable technical indicator ). One should have been worried when these stocks were 8 to 10 times higher a couple of years ago.

    The WALL OF WORRY is alive.

  • Report this Comment On April 03, 2014, at 12:52 PM, Matt8265 wrote:

    Im amazed that 50 TMF articles generate maybe 10 comments. I think some fine authors have their work overlooked with TMF being taken as rubbish.

  • Report this Comment On April 03, 2014, at 1:53 PM, dafacai wrote:

    even such big gus in GS, ML BMO... saying negatives about coal since March, ACI goes up and up, it is not a fun to say no to coal as we need burn around 70 million tons more of coal for the namorlization of natural gas storage before Nov, 2914. It is not a matter if we like coal or not, it is a reality. At least we don;t have enough intrasturcture to take more shale gas (if we really have) to power plants. this is not a research paper at all...

  • Report this Comment On April 03, 2014, at 6:58 PM, markstomarks wrote:

    I hope people are terrified as article writer wants them to be so I can do like Buffett and buy on that fear then sell it back on then when greed sets in.

    Take ANR for example. It is going back to probably $50 a share and those selling it now will as usual be kicking themselves later because they literally had a chance to become filthy rich at these price but heck, we have those selling SIRI another $50 stock to be that I paid 20 cents for and is what three or four bucks a share now but heck, great prices for one going to $50

    AMD is another one but not going as high. I figure $20s there.

    JMO as always and hope you guys know what you are doing. I have been in the markets since 1980 likely before person who wrote this article was even born. I will be selling and getting prices I stated on stocks stated but that is just me.

  • Report this Comment On April 04, 2014, at 6:34 AM, markstomarks wrote:

    The young man in the video means well am sure but is far too young to be a pro since to be a pro at anything it takes years experience perhaps as many years as he is old in this business.

    That said and it looks like he is doing the typical thing most people do who lose money and that is to hold out for what he thinks is the lowest bottom price then buy when that sometimes works but often doesn't since no one can time the markets and that is what he is trying to do.

    These stocks are strongest in this order; ANR, ACI then WLT. Sure, ANR is in best position to end up with the best profits long term and is better able to survive than the other two companies with a price per share over $40 in two years but none look to have a going concern in the next two years and this industry is about to turn around this year not next or the one after that and add to that Republicans will win big in the midterms which is good for this sector and you have all three companies up at least 100% this year with ANR being higher percentage based on book value and the young man forgot to mention the debt is really long term nothing to worry with next few years.

    See you guys in the $50s 36 months from now on ANR, $30s ACI and high $20s or so WLT so obviously, I am going to be averaging down ANR most.I do this in these stocks or sector about every three years or so since that is how long they are down then how long they are up and when Democrats are going to win, I get more into certain pharma stocks since could care less which party is in power as both suck but I know which party favors which sectors while not caring who wins

    JMO

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