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Importance of Coal and Power Indicators for Investors

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Apr. 28 2015, Updated 9:14 p.m. ET

Exposure to the coal industry

Coal is the world’s most abundant fossil fuel and is used largely for electricity generation and steel production. Investors can get exposure to the coal industry by purchasing individual coal minig and production stocks such as Consol Energy (CNX), Peabody Energy (BTU), Arch Coal (ACI), or Alpha Natural Resources (ANR). Additionally, investors can purchase a coal-focused ETF such as the VanEck Vectors Coal ETF (KOL) which holds a portfolio of international coal companies..

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Coal’s 1Q15 slide

Through 1Q15, the VanEck Vectors Coal ETF (KOL) has declined about 10%. Furthermore, most domestic coal companies saw precipitous declines in stock prices through 1Q15. For instance, ACI’s stock dropped ~45%, and BTU’s stock dropped ~40%.

Note that stocks of coal companies can be very volatile, and are generally higher beta. In this series, Market Realist identifies and explains major factors affecting coal companies, and therefore movements of coal stocks.

Such factors include natural gas inventories and prices, oil prices, electricity production, coal shipments, and weather. See the following sections for more details.

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