If you're looking for an energy company that leads the parade in the size of its earnings surprise and its upside potential, you may not find it in oilfield-services leader-of-the-pack Schlumberger (NYSE:SLB), or in ConocoPhillips (NYSE:COP). And it probably won't be giant ExxonMobil (NYSE:XOM). Instead, my vote goes to Peabody Energy (NYSE:BTU), the king of coal companies.

For the quarter, Peabody increased its income from continuing operations by 143%. The company's revenue increased 43% year over year, to $1.5 billion. Those are clearly awesome numbers, but if you're sniffing around for investments in companies with lights-out supply-demand characteristics, keep this in mind: China has already shuttered 60 coal plants that have dipped below three days of coal inventories. And, as you probably know from reading the good work of my Foolish colleague Christopher Barker, Australia is experiencing transportation bottlenecks, as demand -- especially from China -- vastly outpaces rail and port capacity.

According to CEO Greg Boyce -- who noted that "we believe global supply and demand is even tighter than many think" -- the company enjoys big opportunities in four areas:

  • Its unmatched global platform.
  • Its ability to re-price legacy contracts to better reflect current conditions.
  • Its focus on lowering costs and increasing its ability to move coal to markets.
  • The financial and operational flexibility provided by its strong cash flow.

I've rarely seen a big company recast itself as quickly as Peabody has. As Boyce observed, only 1% of Peabody's earnings came from outside the U.S. five years ago. Today, more than half does. That fact alone distinguishes Peabody from rivals like Arch Coal (NYSE:ACI) and Patriot Coal (NYSE:PCX), two of its St. Louis neighbors.

I can't buy shares of Peabody for the next 10 days, because I've told you about the company. That's as it should be. But you, my Foolish friends, are not similarly restricted.

I'm rating Peabody an outperform. Have you weighed in on the company with the Motley Fool CAPS crew?

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Fool contributor David Lee Smith hasn't acquired shares of any of the companies mentioned. He does welcome your questions or comments. The Fool has a well-mined disclosure policy.