Peabody Energy Corporation (BTU), Cloud Peak Energy Inc. (CLD), CONSOL Energy Inc. (CNX): Everybody’s Doing It

In order to materially grow, Westshore would have to notably expand throughput in some way or make an acquisition. The upgrade nature of recent capacity increases suggests that a major overhaul is unlikely. On the acquisition front, CONSOL Energy Inc. (NYSE:CNX) is currently evaluating options for increasing shareholder value that could include selling its Baltimore terminal. Westshore would be a good fit for the asset, but the remote possibility of this happening clearly isn’t a good reason to buy Westshore today.

Not the only option

That said, Westshore isn’t the only company with coal handling facilities. Kinder Morgan Energy Partners LP (NYSE:KMP) owns around 80 dry bulk and 35 train loading and unloading facilities. Moreover, the partnership has around $450 million worth of expansion projects in the works to support the export needs of coal partners like Peabody Energy Corporation (NYSE:BTU).

The only problem is that the terminals unit only generates about 15% of Kinder Morgan Energy Partners LP (NYSE:KMP)’s top line. So it is far from a pure play on coal exporting. In fact, even the terminal business isn’t focused exclusively on coal, controlling another 27 terminals dedicated to liquids.

Kinder Morgan is really a midstream oil and gas company with modest exposure to coal handling. Still, if you are looking for diversification and indirect exposure to coal’s export growth, Kinder and its around 6.4% yield might be a of interest.

A pure play

So, Westshore Terminals is an income play with modest growth potential that happens to be a pure play on the export growth of coal. That’s not a perfect fit for everyone, but it is a nifty way for you to get natural resource exposure without all the commodity risk.

The article A Focused Play on Coal’s Export Future originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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