A weak dollar combined with upward revisions to global growth
and a seemingly successful quantitative easing program (for the
time being at least) all lend credence to those calling for higher
There are plenty of oil and gas companies out there that small
cap investors should consider buying. But with more rapid growth
expected in developing nations, I'd recommend taking a look at coal
related investments as well.
Coal is cheap, dirty, and hated. The combination, while not
necessarily great cocktail party fodder, typically makes for a
great investment. The reality is that this commodity is a shoulder
energy source for many developing countries that don't yet have the
infrastructure to distribute alternative energy sources (that also
happen to be more expensive net of tax credits) like wind and
solar, as well as more traditional sources like oil and natural
One way to gain broad exposure to coal is through
Market Vectors Coal ETF (
, an option that has returned 17.2 percent for investors so far in
2010, and 40 percent since the end of August.
***A very wise man once said "
century belonged to England, the 20
century belonged to the US and the 21
century belongs to China. Invest accordingly
". That man was Warren Buffett, one of the most well-known,
well respected, and most successful investors in the world.
During the middle of the global financial crisis, China's GDP
growth slowed to 6.2 percent. It has since returned to previous
levels near 10 percent GDP growth. I wish US GDP could hit 6
percent. You have to go back to the 1980s to see the U.S. with that
rate of growth.
According to the International Energy Agency (
), last year China passed the United States and became the world's
largest energy consumer. The IEA says China consumed about 2.3
billion tons of oil equivalent (btoe) in 2009, while the US
consumed 2.2 billion tons, about 4 percent fewer.
This "changing of the guard" was not the least bit surprising to
those of us who have been monitoring China's growth. The EIA's
chart below shows Asia's increasing coal consumption over the
coming 25 years relative to that of the rest of the world and North
As Asia, meaning mainly China, continues to export more and more
goods, producers are using more inputs. Naturally, energy is one of
the largest of these. Contributing to the growth of energy
consumption is the fact that China's middle class, which according
will reach 700 million by 2020, is using more energy as they
purchase cars, homes, and other consumer products.
Fatih Birol, chief economist at IEA, said this change in global
energy consumption marks "...
a new age in the history of energy
". Avoid the transition at your own profit-peril. You should have
some exposure to the trend, and coal mining companies are one of
the best ideas.
EIA's 2010 International Energy Outlook
, the agency projected that coal use would continue to be the
second most popular choice for the foreseeable future, through
Investors should at the very least have some exposure to coal
for the simple fact alone that it is one of the largest
contributors to global energy output.
Coal is in many ways the antithesis of clean energy, but don't
let that fact alone deter you from investing in it. It is plentiful
and cheap. Consider coal to be a 'subsidy' to alternatives -
phasing alternatives into the energy mix while continuing to use
coal keeps the entire energy supply within bounds of what is
The United States only developed so quickly and got to where it
is today by using coal and other energy sources that were easily
accessible. China and other developing nations represent the
country we used to be in terms of energy needs.
The fact remains that coal is the top energy source driving the
global economy. Adding coal exposure to your portfolio is the best
way to gain exposure to growing energy consumption. Doing so means
you're invested in what is proven to work- that's an approach that
would make even Warren Buffet proud.
Small Cap Investor PRO
analysts uncovered a high growth coal mining company that is
cashing in on the coal boom. This company will report its most
after the close today
. The stock has risen 20 percent since the end of November, and
major media outlets are finally catching onto this tremendous
growth story. You can get the background on this company, and other
fast growing small cap stocks,