If you’re still a commodity bull then Coal should be on your radar screen. There’s a lot of it, 100% proven reserves and unlike oil it’s supply isn’t that dependent on political stability a la Middle East/Africa/Venezuela etc.
Exciting new develops within the industry are also taking pace namely Coal-to-liquids (CTL) technology which converts it into petrol and diesel. Promoters of this technology say it’s profitable and viable with an Oil at $40+.
Some quick facts -
Coal demand is growing at a furious pace in China, it gets 70% of its power from coal fired plants
US coal consumption is expected to rise by around 75% heading towards 2030
Some analysts are suggesting that coal firms have the potential to generate better returns that oil firms over the next decade
Two Coal Stocks
Peabody (BTU)
World’s largest producer
Price earnings growth ratio of 0.7%
Share price has fallen nearly 50% in the last 5 months and we always like to see this kind of price action when long term bullish of a commodity/sector – gets all the stale bulls out and everyone depressed
Yes, the short term media led circus that is now the markets has said the commodity boom is now a bust or at least no more. Well, we wouldn’t be so sure of this and fancy that this view is only because prices have been coming down since the beginning of the summer. But who said retracements in a bull market weren't a natural occurrence?
If you’re thinking long term and that commodities are a good trade for the coming decade then do some further research on the Coal sector because it looks promising.
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