Best Coal Stocks to Buy Now Alpha Natural Resources (ANR)
With the global economy finally beginning to move forward, Alpha Natural Resources (ANR) is one of a few coals stocks that could be an interesting turnaround play. See, unlike CLD and BTU, ANR mainly produces metallurgical coal — the kind used in steel making.
Currently, metallurgical coal prices are flat due to oversupply. That’s hurt the company’s bottom line and ANR stock over the last few quarters. However, with industrial output ramping up in key steel producing nations — namely, Japan, China and South Korea — the medium- to longer-term picture seems to be a bit rosier for ANR stock.
At the same time, ANR has a few aces up its sleeve vs. other coal stocks. First, Alpha Natural Resources plans on selling its ownership stake in a shale gas joint venture for $300 million in cash and shares to Rice Energy. Aside from boosting its near-term liquidity, Rice Energy plans to IPO in early 2014. That will provide a nice exit event for ANR stock.
Secondly, ANR recently issued a series of convertible notes at a cheap 4.875% interest rate. Those notes will be used to retire current liabilities. Overall, the bond issue and shale gas sale boosted ANR stocks liquidity to nearly $2 billion. That should be more than enough to help ANR stock ride out the downturn in metallurgical coal prices until they rebound. That liquidity position is enviable for many other coal stocks.
In view of the better long-term picture, investors may want to give ANR stock a go. And if not, the other coal stocks on this list are solid if you want to bet on the beaten-down sector.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.