Coal as a sector caught fire early in 2008, but then burned a hole through many investors' portfolios, as mining stocks snapped back with a vengeance. For the intrepid investor willing to hold an ember, however, I believe the sector offers substantial upside potential.
I'll admit that Massey Energy
Massey's earnings disappointed the analysts, but not this Foolish shareholder. Its $53.6 million in net income for the fourth quarter, along with a 63% improvement in EBITDA to $148.8 million, marked an operational success that its battered share price doesn't seem to reflect. Massey's operating cash margin improved by 69% to more than $13 per ton. Competitor Alpha Natural Resources
Of all the deep-value prospects within the embattled coal-mining sector, I would not list Massey among my top picks. Given allegations of environmental transgressions and legal battles over the company's practice of mountaintop removal, I believe Massey is an easy target for potential regulatory changes. Furthermore, the company's $250 million settlement of another court case drained substantial liquidity at a most inopportune time.
With far less exposure to the unpopular surface mining practices of fellow Appalachian coal miners, CONSOL Energy
The "Coal" tag within the Motley Fool CAPS community lists 21 coal companies. Find out what other investors are saying about the stocks you're watching, or share your Foolish thoughts with us. CAPS is free and fun!
Fool contributor Christopher Barker captains yachts and writes about stocks. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Arch Coal, Massey Energy, and Peabody Energy. The Motley Fool has a disclosure policy.