“I’m about to blow your mind…” I warned Addison Wiggin, Agora Financial’s executive publisher.
I had just found out a stunning fact about U.S. energy – and couldn’t help but share it when Addison walked past my desk.
Today I want to share the same info with you – and although you may not have the same affinity for this information, there’s a profitable twist that I’m sure you’ll like….
First, let’s recap what we covered yesterday…
With the bad news that’s been flooding the coal industry over the past few years, sentiment in the market for U.S. coal producers couldn’t be worse.
Point is, there’s a stunning “buy low” opportunity in U.S. coal producers. There’s a lot of reason to like coal right now, too.
You see, although coal use in the U.S. may be gearing down, the rest of the world is ratcheting up.
As we covered yesterday, coal is easy to transport. So while the U.S. begins using more natural gas (from booming shale fields), more seaborne coal will head to Europe and Asian markets.
Here’s the kicker, burning coal is still a fraction of the cost of renewable energy. So if debt-stricken Europe and energy-hungry Asia want to keep the lights on, increasingly they’ll be turning to king coal. That bodes well for the U.S. export numbers.
And you won’t believe where that coal is coming from…
The Answer Was Hiding Within A Stone’s Throw From My Office!
Getting back to my conversation with Addison, “Here’s a little resource trivia for you…” I commented to him.
“The No. #1 exporter…. of U.S. coal…. to Asia…Is…..”
Drumroll please…. Baltimore, Maryland!
Whaaaaaaaaat!?!? Who’da known! When I first found out that little tidbit my mind started spinning. I instantly wanted to know how this was possible. My hometown of Baltimore couldn’t possibly be the biggest supplier of coal to Asia, could it? Where was all of this coal hidden?
In plain sight, take a look…
According to the U.S. Energy Information Administration, “Exports to Asia originate mostly from the East Coast […] primarily out of Baltimore. Somewhat counter intuitively, most coal out of Baltimore — almost double the port’s European volume—is destined for Asia, the world’s largest coal consuming region.”
As I said above, if you’re not from Baltimore you may not have the same affinity for this wild information. But the coal trail leads us to one company that you’ll want to add on your radar.
And as you’ll see, it’s not just this company’s affiliation to Baltimore that could set it apart in the coal game…
One Way To Play Coal’s Rebound…
The owner of the Baltimore coal-exporting facility pictured above is Consol Energy (CNX.)
Consol is in the sweet spot of this energy situation. Once a primary coal supplier in the U.S., Consol is now a hybrid company that produces natural gas (from shale) and exports loads of coal to Asian markets.
The Asian exports come from its wholly-owned Baltimore export facility, which is set for a handsome upgrade this quarter. Consol plans to increase the facility’s capacity from 14 million tons per year to 16, all in an effort to accommodate a growing world market.
If you’re wondering, the seaborne coal hits the Atlantic and heads east. The majority then travels south, below the tip of South Africa, and eventually ends up in India, China or other Asian locales. U.S. coal, headed east…that’s the trend.
And did I mention the stock is on sale? Since its 5-year high near $70, Consol’s shareprice sits at just half that price today. With continued strength in the global coal market, Consol’s East Coast facility could be the harbinger of a substantial payout.
But don’t just take my word for it. With Consol, there are a lot bigger names on board, one of which I’m sure you’re familiar…
Legendary oilman T. Boone Pickens just added Consol to his BP Capital fund in the third quarter. Pickens played Consol before for a timing trade, so when it comes to timing this energy player he knows a thing or two. Right now you can get in right alongside him.
Add it all up and the next 12 months could be turnaround time for U.S. coal. And with more output headed to Asia, Consol could be the darling of the bunch.
Keep your boots muddy,
Original article posted on Daily Resource Hunter
The Managing Editor of the Daily Resource Hunter, Matt is the Agora Financial in-house specialist on commodities and natural resources. He holds a degree from the University of Maryland with a double major in Business and Environmental Economics. Although always familiar with the financial markets, his main area of expertise stems from his background in the Agricultural and Natural Resources (AGNR) department. Over the past years he's stayed well ahead of the curve with forward thinking ideas in both resource stocks and hard commodities. Insley's commentary has been featured by MarketWatch.
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