Coal stocks get a green light

The EPA is backing away from tighter restrictions on pollutants. The news will be good for Peabody and Arch.

By Jim Cramer Dec 10, 2010 9:52AM

more stock picks and investment strategy from jim cramer at thestreetWe know who won the elections in November: coal.

 

That's right. With the news this morning that the Environmental Protection Agency is backing away from placing tighter restrictions on pollutants, the coal-burning utilities are going to be able to keep burning all the coal they want without much fear.

 

The stunning turn would be the green light allowing the 30- to 40-year-old plants, the ones that spew the most into the atmosphere, to keep running rather than being forced into retirement, as we would have expected.

 

It is a major blow to natural-gas companies, which had thought that this was their time because the EPA, as tough as it is against fracking, is totally favorable toward using natural gas as a bridge fuel for utilities on the way to wind and solar power.

I have been saying that the EPA will now look the other way, provided we use cleaner coal. This EPA switch is fabulous for Peabody (BTU), and while it is only a point from its high, I still think you should be a buyer.

 

It's also good for Arch Coal (ACI), but with Arch you lose the Chinese kicker.

 

The stocks have been strong, in part because of the consolidation going on, and also because of strength in China. It had all had been tempered, though, by an aggressive EPA that seemed on the verge of deeming certain plants as "must-close" operations.

 

That's done. Coal parties on. BTU wins.

 

Random musings: If you own Netflix (NFLX) and F5 (FFIV), sell half into the S&P surge if you haven't sold some already.

 

At the time of publication, Cramer had no positions in the stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Follow Cramer's trades for his Charitable Trust.

 

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1Comment
Dec 10, 2010 11:12AM
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BUY, BUY, BUY! Cramer owns coal stocks. What's good for him is good for you.
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