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.
The stock market may continue its record-setting plunge today as the drumbeat of negative sentiment drowns out what little good news there is to be had.
Markets in Europe and Asia were sharply lower as fears of a lingering recession continued to heighten. Japan's Prime Minister Taro Aso told members of Parliament that the U.S. bank bailout was "insufficient" to quell the fears of investors, according to the Associated Press. Meanwhile, the government of Switzerland is pumping billions into ailing UBS AG (NYSE: UBS) which gorged itself on mortgage-backed securities. Oil prices also fell to a 14 month low is Asia. U.S. stock futures were mixed.
Here is a look at other stories which may interest investors.
TheStreet.com's Jim Cramer is scaling in on the way down in names that have intrinsic worth.
Sure, there's been a steep fall in commodities, but at a certain point you have to believe they can bottom out. More important, some stocks, I believe -- certainly not all, but some -- are reflecting what might turn out to be rock-bottom prices if any of the major central banks start cutting anytime soon. Steels, coppers, infrastructure -- some stock or stocks might represent intrinsic value, or value at least to some other company that believes commodities will stabilize and go up in the next couple of years.
This collapse, which mirrors the collapse of all things early-cycle going into the July 15 changeup, has such a stunning velocity that you could see stocks like Freeport-McMoRan (NYSE: FCX) (Cramer's Take) down another 10 points in a heartbeat, even though they are making lots of money.
MOST NOTEWORTHY: Tower sector stocks, Tesco Plc and Alcoa were today's noteworthy upgrades:
RBC Capital upgraded American Tower (NYSE:AMT), Crown Castle( NYSE::CCI), SBAComm (NASDAQ:SBAC) to Outperform from Sector Perform citing recent weakness in the tower sector group and a continued favorable outlook.
Merrill upgraded shares of Tesco (Other OTC:TSCDY) to Buy from Neutral as they believe it is the only proven growth stock in the sector.
Soleil upgraded shares of Alcoa (NYSE:AA) to Hold from Sell on valuation following the recent weakness.
Soleil upgraded Alcoa (NYSE:AA) to "hold" from "sell", according toBriefing.com. The news service also reports that Citigroup upgraded Peabody Energy (NYSE:BTU) to "buy" from "hold".
D.A. Davidson raised it price target on Talbots (NYSE:TLB) from $7.50 to $12.50, according to the AP.
Douglas A. McIntyre is an editor at 247wallst.com.
"Coal miner Peabody Energy Corp. (NYSE: BTU) looks hot," says Leo Fasciocco, who focuses on stocks that have broken out from technical basing patterns.
In his The Ticker Tape Digest, he explains, "The stock rose above its break points of $81.20, hitting a new high." He adds, "With net set to surge 70% this year, we see an upside target of $105 per share."
"Peabody, based in St. Louis, is a major producer of coal with annual revenues of $4.7 billion. BTU's coal fuels more than 10% of U.S. electricity generation and 2% worldwide.
"The company has mining operations in Appalachia, the Powder River Basin, and the U.S. Southwest and Midwest, as well as Australia and Venezuela. It also markets, brokers, and trades coal, and develops electricity-generation projects.
"Technically, BTU has broken out from a six-week flat base today with expanding volume. It is part of the strong coal group, which has been one of the strongest acting sectors of the market.
With crude oil prices soaring, shares in coal and fertilizer companies have also been climbing for the past year. Barron's offers a survey of the momentum plays, pointing out some opportunities and risks when investing in coal and fertilizer stocks.
Talking about risks, Barron's underlines the fact that it can be difficult for investors to put their hard earned money into a stock that is already trading near its highs. But as they say, the trend is up unless proven otherwise, and we might take this into account when picking our trades. For example, back in April, it looked like Mosaic Co. (NYSE: MOS) was facing technical weakness, but this did not last long and the company was able to rebound.
Now let's take a took at the coal sector. Data shows that the Dow Jones U.S. coal index gas gained more than 50% for the past year. While James River Coal Co. (NASDAQ: JRCC) has quadrupled this year, Peabody Energy Corp. (NYSE: BTU) has been seeing some weakness, and this might be a sign that the sector could face tough times ahead. The first concern tied to supply and demand appeared for Peabody when we began to notice that volume on rally days slipped, while volume on declining days has increased.
Deutsche Bank downgraded Best Buy (NYSE:BBY) to "hold" from "buy", according toBriefing.com. The news service also reports that Merrill upgraded Peabody Energy (NYSE:BTU) to "buy" from "neutral."
Legg Mason (NYSE:LM) was raised to "neutral" at Credit Suisse, according toBriefing.com. The financial site also reports that Hughes Communications (NASDAQ:HUGH) was started as "overweight" at Lehman Brothers.
Kaufman Brothers reiterated its "hold" on NetFlix (NASDAQ: NFLX) ahead of the company's analyst meeting, according to the AP.
Merrill Lynch upgraded UBS (NYSE: UBS) from "neutral" to "buy," according toBriefing.com. The news service also reports that JPM upgraded Nvidia (NASDAQ:NVDA) from "market perform" to "outperform."
WebMD (NASDAQ:WBMD) was raised to "buy" from "hold" at Citigroup, according to 24/7 Wall St.. The financial site also reports that Peabody Energy (NYSE:BTU) was raised to "buy" from "neutral" at UBS.
Douglas A. McIntyre is an editor at 247wallst.com.
"Oil prices have made the headlines recently," says Martin Hutchinson in The Money Map Reporter. "But the miracle fuel of the 19th Century is coal, the forgotten fossil fuel."
"Coal is located primarily in politically stable, friendly countries - most notably the U.S. market itself. Coal prices have zoomed northward during the past year. The current spot price is around $135 per metric ton, more than double the level of a year ago. Meanwhile, coal production is running way ahead of forecasts.
"In 2005, the World Coal Institute reported production of 4,970 million metric tons, up 78% over 25 years. The main reason for coal's growth is that 80% of China's power needs and 65% of India's come from coal-fired stations.
"Since both India and China are expected to quadruple their power consumption by 2030, most of that increase must come from coal-fired stations. What are the best buys in the sector?
"Despite its dirty image, coal accounts for more than half of US power generation," says Elliott Gue, editor of the industry leading The Energy Strategist.
The advisor explains, "Although crude oil consistently makes the headlines, few realize that US coal prices recently surged to a fresh high." Here, he reviews a new portfolio holding, Peabody Energy (NYSE: BTU).
"In addition to rising domestic demand, we are also seeing foreign demand. Indeed, coal accounts for about 50% of Germany's electricity production, 34% in the UK, 17% in Italy and a whopping 93% in Poland.
"Europe doesn't have enough coal production locally to satisfy demand. And now, the problem is that traditional sources of European coal imports aren't readily available.
MOST NOTEWORTHY: The coal sector, independent refiners and Alexion Pharmaceuticals were today's noteworthy downgrades:
Goldman downgraded the coal sector to Cautious from Neutral, citing valuations and expectations for lower coal prices. The firm downgraded CONSOL Energy (NYSE: CNX) Peabody Energy (NYSE: BTU) to Neutral from Buy and Arch Coal (NYSE: ACI) to Sell from Neutral.
Lehman downgraded independent refiners, including Alon USA Energy (NYSE: ALJ), to Negative from Neutral and continues to believe that 2H07 marked an inflection point for U.S. refiners, which are transitioning from a multiyear up-cycle into a new downtrend.
Alexion Pharmaceuticals (NASDAQ: ALXN) was lowered to Market Perform from Outperform at Wachovia following the company's Q4 results, as they believe management's revenue guidance represents a best-case scenario.
OTHER DOWNGRADES:
Lehman lowered Bayer (OTC: BAYRY) to Equal Weight from Overweight and Whole Foods (NASDAQ: WFMI) to Underweight from Equal Weight.
Lehman Brothers has downgraded Whole Foods (NASDAQ: WFMI) from "equal weight" to "underweight" and lowered its price target to $32 from $35, according toBriefing.com. The news service also writes that Citigroup has added Brocade (NASDAQ: BRCD) to its "Top Picks" list.
Most investors are aware that China's surging growth and increasing energy use have helped push oil to +$90 per barrel near-record highs. But what many probably don't know is that China's double-digit GDP growth is forcing up the price of another major energy source: coal.
The price of coal -- the most plentiful energy resource -- is rising at an alarming rate: Asia prices are up more than 30% this year, The Wall Street Journal reported Tuesday(subscription required), due mostly to China's net importer status. China had been a net exporter of coal, but in mid-2007 it imported coal for the first time. Coal is trading above $125 per metric ton. In 2003 it traded at about $25 per metric ton. Since January 2007 alone, coal is up more than 140%.
U.S. coal suppliers have benefited from the run-up: Arch Coal (NYSE: ACI) is up about 90% since August 2007; ACI was down about $1.50 to $53.32 in Tuesday afternoon trading. Meanwhile, Peabody Energy (NYSE: BTU) is up about 45% since August 2007; BTU fell 40 cents to $56.12 on Tuesday afternoon.
MOST NOTEWORTHY: Vail Resorts, Peabody Energy and EnteroMedics were today's noteworthy initiations:
Wachovia initiated Vail Resorts (NYSE: MTN) with an Outperform rating and said the company's real estate platform is not being valued at current valuation.
Calyon believes Peabody Energy (NYSE: BTU) is well-positioned to take advantage of tightening global coal fundamentals and rising coal prices. The firm started shares with an Add rating and $70 target.
EnteroMedics (NASDAQ: ETRM) was assumed with a Neutral rating at Cowen, as they believe the company lacks near-term catalysts ahead of EMPOWER results in 2H09.
OTHER INITIATIONS:
Lehman initiated Akzo Nobel (OTC: AKZOY) with an Overweight rating.
Bear Stearns started Napster (NASDAQ: NAPS) with an Underperform rating and RealNetworks (NASDAQ: RNWK) with an Outperform rating.
The stock market may continue its record-setting plunge today as the drumbeat of negative sentiment drowns out what little good news there is to be had.
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With crude oil prices soaring, shares in coal and fertilizer companies have also been climbing for the past year. Barron's offers a 
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