in the U.S. is surging, and should continue to do so in the
coming years. But another natural resource is making waves
U.S. coal exports are headed for a record year. According to
the Financial Times, the U.S. is on track to break the 1981
record for coal exports of 112.5 million. Demand in Europe is
especially high, accounting for more than half of this year's
coal export tally.
Why the increased demand? Because coal is cheap - cheaper than
it's been in 40 years. Little more than four years removed from
its all-time peak price of $161 per ton, coal dipped to $63 this
Natural gas is cheap too, even after its recent rally. But in
Europe, coal is cheaper.
Natural gas is routinely sold as part of a package with oil in
Europe. And oil is still close to $100 a barrel despite a recent
Coal is sold on its own, and at $63 a ton, it's a bargain.
That said, if overseas demand for the fossil fuel reaches
record heights this year as projected, don't expect coal prices
to stay dirt cheap for long. My colleague
recently that he believes coal "could safely return 100%-200%
gains in the next few years."
That makes it a good time to buy shares of companies such as
Peabody Energy Corp. (
- the largest coal producer in the U.S., which at $21.78 a share
is close to four-year lows. It's trading at less than seven times
earnings right now.
Surely there are other coal companies out there that are just
as cheap. But they might not be for long if European demand for
the resource continues to break records.
For once, a lump of coal in your proverbial investment
stocking might not be a bad thing.