The Contrarian Case for Coal Stocks

The sudden abundance of natural gas and tightening of coal-emission standards by the EPA has pushed U.S. coal prices down sharply over the past five years as generation plants shifted their energy preference to the cleaner and cheaper resource:

While no one is suggesting we’re at the dawn of a new coal age, a research note from Westwood investment management makes an interesting case for why we may be at an important inflection point. With natural gas losing some of its pricing edge relative to coal and coal inventories already at lows, we could be at the turn for an incremental shift in demand for coal. “…(W)e believe that 2014 could mark a new profitable stage for the coal sector as headwinds have turned into potential tailwinds,” wrote Westwood’s energy research team.  (more)