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In January, Alpha Natural Resources (NYSE:ANR) soared to a 52-week high around $68. Since then the stock has cratered some 30%. During that time frame, ANR snatched up Massey Energy (NYSE:MEE) and now controls the largest domestic metallurgical reserves, enough to become the third largest in the world. (See The New Met Coal Powerhouse.)

So why has the stock been hammered from those January highs to the lows today around $46? Difficult to tell in this fickle market. The deal with MEE closed recently and the stock has just plunged during June. Maybe a bunch of MEE holders have dumped the stock upon the conversion to ANR shares. If so, this is the ultimate buying opportunity.

Domestic met coal player Walter Industries (NYSE:WLT) has seen a dip but the stock remains much closer to the January peak even though WLT is a much more volatile stock.

According to analyst estimates, ANR trades at a lowly forward PE of 7.5. The company has upside potential to those numbers as it consolidates and improves the operations of MEE. Plus the companies expect to see synergies of $150M in 2012 adding significantly to earnings.

Sure China has slowed and the Japan disaster has impacted auto production which is a major user of steel and hence met coal. Look for the coal sector including ANR to see a bounce as auto production gets back to normal by month's end. Not to mention that Japan now needs to import more coal with the shutdown of nuclear reactors. ANR is perfectly positioned to supply the export market with thermal coal as well.

The technicals are weak with the stock trading below the 200ema, but the stock is very attractive when it bottoms out whether today or next month. WLT has huge support at these levels and would provide a good entry for anybody wanting diversification in the sector.

Just remember that while WLT gets a lot of publicity for being the leading domestic pure play on met coal, ANR will have a reserve base over 3x that of WLT (1.3 Bt compared to 385 Mt). The market tends to focus too much on production numbers and not enough on reserves. ANR has a huge opportunity to increase production.

Japan must rebuild and it will need to make a lot of steel.

Disclosure: I am long ANR.