I did some research on coal companies and decided that even though many were just going for small fractions of their book values, the sector is showing no signs of bottoming and are too risky to own. Making money with coal stocks right now, even the big names, is not as bad of odds as one would face trying to get rich from buying lottery tickets. But it might be pretty close.
However, in my search I did run across one article that pointed out a couple companies that showed some promise. Aaron Levitt suggested owning coal terminal owners instead of the coal names themselves, click here. He recommended Kinder Morgan (KMI) and CONSOL Energy (CNX).
Kinder Morgan, Inc.
The above weekly chart shows Kinder Morgan is trading near an excellent support level of $38. It could briefly spike down to the low $36s like it did last December, but all dips look to be a buy. The stock offers a nice dividend and also has appreciation potential.
CONSOL Energy, Inc.
By owning its own export terminal at Baltimore Marine, CNX does not need to pay terminal fees to another company. Other coal companies are paying them. Also David Einhorn is getting involved, click here. I love to trade stocks where David Einhorn is involved as they tend to be quite volatile. Looking at the above chart, it is apparent that CNX is washed out at $22. Previously the stock bounced $10 from $32 to $42 last fall. Early this year CNX saw a 3 week bounce from $28 to $34, followed by a 3 week selloff to $26. Then it took 8 weeks to get to $34. The past 7 weeks have been straight down. It could keep falling so don't jump in immediately on Monday morning but watch this stock for stability. It should find some soon. Getting David Einhorn's endorsement won't hurt. This stock interests me because it is a real mover, both to the upside and especially to the downside recently. Again, this is definitely one to watch!
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Disclaimer:
The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.