Cloud Peak Energy Inc. (CLD), Peabody Energy Corporation (BTU), Alliance Resource Partners, L.P. (ARLP): These Coal Companies Offer Unique Opportunities

And Alliance Resource Partners, L.P. (NASDAQ:ARLP) rewarded unitholders with another quarterly distribution increase, the 21st consecutive hike. While other coal miners have struggled, Alliance has been a star performer. Although this limits capital appreciation potential, since the units have already rebounded from their lows, the around 5.9% distribution yield, regular distribution hikes, and modest capital appreciation potential should be an enticing combination to just about any investor.

Sticking to home

Coal is in the doldrums, but the foundation for a recovery appears to be building. Widely diversified miner Peabody Energy Corporation (NYSE:BTU) is an industry favorite because of its exposure across coal types, customer types, coal regions, and the global nature of its operations. This diversification, however, will limit the lift from improving U.S. thermal coal markets.

Cloud Peak and Alliance Resource Partners, L.P. (NASDAQ:ARLP), however, are both tightly focused on the two most competitive domestic coal regions. Cloud Peak is the riskier of the pair, since results have been weak. That said, it’s focused on the PRB, the cheapest U.S. coal region. Alliance, though lacking recovery appeal, continues to perform well above industry levels, offers a near 6% yield, and has a history of regular distribution increases. That’s an alluring combination even if the units only offer modest appreciation potential on improved ILB coal pricing.

The article These Coal Companies Offer Unique Opportunities originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Alliance Resource Partners, L.P.

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