"And by the way, I like coal."
It takes courage to say that, and Mitt Romney's remark in
Wednesday's presidential debate drew investors' attention.
If Romney is elected president, how could income investors
play a friendlier environment for coal?
One way is coal-fired utility stocks. The Obama
administration's Mercury and Air Toxics Standards rule gives
coal-fired utilities until April 2015 to meet the new
regulations. The cost of compliance is significant. In some
cases, it will involve retirement of units.
Meanwhile, Reuters recently reported that the decline in the
price of coal and the rise over the past six months in natural
gas prices have some utilities turning to coal to generate
In April, the price of natural gas was less than the price of
coal. Historically, coal is cheaper than natural gas, so the two
commodities are back to a more normal relationship.
Let's take a look at five companies with coal-fired units.
Minnesota-basedXcel Energy (
) has a dividend yield of 3.9%. The five-year EPS stability
factor is a calm 3 on a scale of 0 to 99. EPS is expected to grow
3% this year. The stock is 6% off its 52-week high.
North Carolina-basedDuke Energy (
) has a dividend yield of 4.7%. The EPS stability factor is 6.
Earnings are forecast to slip 2% this year. The stock is 8% off
Based in New Jersey,NRG Energy (
) has a dividend yield of 1.6%. Because of losses in 2011, the
stock lacks an EPS stability factor. Earnings of 95 cents a share
are expected this year, up from a loss of $1.84 a share. NRG is
near a new high and a 23.01 buy point in a flat base. The pattern
also could be seen as a 14-month-long cup with handle with the
same buy point.
Ohio-basedAmerican Electric Power (
) has a dividend yield of 4.2%. The EPS stability factor is 5.
Earnings are expected to dip 2% this year. The stock is less than
1% off its high.
Georgia-basedSouthern Co. (
) has a dividend yield of 4.3%. The EPS stability factor is 3.
Earnings are expected to grow 4% this year. The stock is 5% off
Ohio-basedFirstEnergy (FE) yields 4.9%. EPS stability is 6.
Earnings are expected to drop 7% this year. The stock is 12% off