Whether it's a recession or an economic boom, one thing doesn't change, the need for energy. And until technology leaps ahead, coal is the largest producer of fuel for the generation of electricity in the world. It's also the most abundant fossil fuel in the United States. Coal is obviously not recession immune as people tighten the reigns on their lives and cut back on electricity consumption, but the shear necessity of electricity makes the coal industry fairly resistant. An investment in an exchange traded fund (ETF) that is centered on the coal industry is a great way to hedge your bets by investing in a pool of successful companies in the coal field.

Market Vectors Coal ETF (NYSE: KOL) seeks to replicate the price and yield performance of the Stowe Coal index, which provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry. With KOL you'll own shares of some of the most noted coal companies in the world, including Arch Coal Inc. (NYSE: ACI), which specializes in steam and metallurgical coal; CONSOL Energy Inc. (NYSE: CNX), a large provider of fuel for electricity in the United States; Alpha Natural Resources Inc. (NYSE: ANR), another leader in steam and metallurgical coal; and Peabody Energy Corp. (NYSE: BTU), an exploration miner and coal producer worldwide, as well as several other highly rated coal companies across the globe.

Market Vector charges only a 0.65% fee, a fraction what a professional money manager would charge you to analyze research and pick coal mining stocks with this level of global reach. Recently KOL has gone through a typical correction for this commodity sector, but then suffered a greater hit as Asia saw a 20% decline in spot prices for thermal coal. The result? A better deal for those currently willing to dive into coal as an investment. KOL is up 14%, so maybe there's some light at the end of the mine.

While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.

Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.

Alpha Natural (NYSE: ANR) will be acquired by Cleveland Cliffs (NYSE: CLF) in a cash and stock transaction valued at $10 billion.

ANR stockholders will receive 0.95 CLF common shares and $22.23 in cash. Based on CLF closing price on July 15, ANR shares would receive $128.12 per share.

ANR August option implied volatility of 86 is above its 26-week average of 64 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Royal Dutch Shell (NYSE: RDS.A) closed at $85.07 Tuesday. Crude futures are down 1.88% to $126.43 according to Bloomberg.

RDS overall option implied volatility of 27 is near its 26-week average of 25 according to Track Data, suggesting non-directional fluctuations.

Alpha Natural (NYSE: ANR), an Appalachian coal producer with a market cap of $5.11 billion, closed at $72.73 Tuesday. Davenport & Company raised its rating to Buy with an $85 target price on May 27.

ANR overall option implied volatility of 65 is above its 26-week average of 58, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

MOST NOTEWORTHY: The more noteworthy downgrades today included eFunds Corp (EFD), Halliburton Co (HAL), Coventry Health Care, Inc (CVH), Fording Canadian Coal Trust (FDG) and US Steel Corp (X):

• Citigroup downgraded shares of eFunds Corp (NYSE: EFD) to Sell from Hold to reflect an unfavorable risk/reward as they see little upside if the company sells itself and significant downside due to recent operational issues if the company is not sold.

• Goldman cut Halliburton Co (NYSE: HAL) to Neutral from Buy based on valuation.

• Bear Stearns cut Coventry Health (NYSE: CVH) to Peer Perform from Outperform based on valuation.

• BMO Capital downgraded Fording Canadian Coal Trust (NYSE: CFG) to Underperform from Market Perform on valuation...

• UBS cut US Steel Group (NYSE: X) to Reduce from Neutral based on valuation.
  

OTHER DOWNGRADES:

• Goldman downgraded the coal sector, citing the potential for fundamentals to disappoint. The firm downgraded Arch Coal (NYSE: ACI) to Sell from Buy, Foundation Coal Holdings (NYSE: FCL) to Sell from Neutral, and Alpha Natural Resources (NYSE: ANR) to Neutral from Buy.

• Matrix cut CBRL Group (NASDAQ: CBRL) to Sell from Hold.

• CE Unterberg downgraded Atheros Communications (NASDAQ: ATHR) to Market Perform from Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).