Coal plays an integral role in meeting the ever-increasing global energy demand, thanks to rapid urbanization and modernization. Despite concerns over air pollution due to the usage of coal, its wide availability and low price compared with other conventional and alternate fuel energy sources makes it a preferred choice in most nations.
The coal industry suffered a great deal when the last U.S. administration introduced stringent emission regulations, including the Clean Power Plan. The national pollution plan, first to call for a limit on coal plant emission, targeted reduction of 32% by 2030 from 2005 levels. However, it was never put into effect due to objections raised by a coalition of coal-focused states.
Meanwhile, the new U.S. administration is set to replace the old Clean Power Plan with The Environmental Protection Agency’s (EPA) Affordable Clean Energy (ACE) rule. The latest rule will allow U.S. states the option to set emission standards at existing coal-fired power plants instead of following a single federal norm.
It will no doubt offer the much-needed respite to coal stocks. If properly implemented, the new plan is expected to lower carbon dioxide emissions at power plants by up to 1.5% by 2030, which is much lower when compared with the prior Clean Power Plan.
The coal industry has gradually turned around on constructive steps taken by the new U.S. administration along with rising international thermal coal demand. The gradual recovery in metallurgical coal prices is also enhancing the industry’s prospects. New coal mines have opened in the United States to cater to the rising demand in domestic and international markets.
Global warming is a pressing concern and the release of carbon dioxide from coal plants is a primary factor aggravating it. But as cheap coal and its reserves will last much longer than oil and natural gas, initiatives are being adopted across the globe to utilize coal more efficiently, keeping a check on emission levels.
Per a U.S. Coal Exports release, by 2050 nearly 70% of the expected 10 billion global population will live in cities. This throws light on the booming prospects of the industry as cities cannot be built without, steel, cement, associated materials and electricity, all of which needs coal as a cheap source of energy.
Let us now look at three top-ranked coal stocks, which are showing signs of improvement and have also outperformed the industry in yesterday’s trading session.
Peabody Energy (NYSE:BTU) holds a Zacks Rank # 2 (Buy). The consensus estimate for St. Louis, MO-based Peabody Energy’s EPS has moved up by 24.8% and 19.8% for 2018 and 2019, respectively, over the last 60 days. The stock gained 2.1% yesterday.
Canonsburg, PA-based CONSOL Coal Resources (NYSE:CCR) sports a Zacks Rank #1. The consensus estimate for the company’s EPU has moved north by 8.3% and 4.3% for 2018 and 2019, respectively, over the last 60 days. The stock added 2.3% yesterday.
Houston, TX-based Natural Resource Partners (NYSE:NRP) holds a Zacks Rank #2 and is a master limited partnership, principally engaged in the business of owning, managing and leasing mineral reserve properties. The consensus estimate for EPU has risen 9.8% and 7.2% for 2018 and 2019, respectively, over the last 60 days. The stock rose 0.8% yesterday.
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