Coal mining is a tricky business right now. Demand for coal has been decreasing, and could continue on that downtrend. However, China still needs a lot of coal, and more relaxed restrictions under President Donald Trump could be the boost the industry needs. In his first speech to Congress, he said, "We are going to stop the regulations that threaten the future and livelihood of our great coal miners."

So many coal companies have gone out of business that the remaining ones have longevity to their credit. (See also: Can President Trump Make Coal Stocks Great Again?)

We have chosen four that look like they can make money going forward and give investors an opportunity to profit in this sector. All figures are current as of August 11, 2017.

1. Cloud Peak Energy Inc.

The stock of Cloud Peak Energy Inc. (CLD) had been rising steadily since the beginning of 2016. However, 2017 has seen a decline. This has occurred on low volume, so the move looks like an orderly downward price channel. The stock has dipped to $3.11 as of this writing.

A steep drop on February 23, 2017 was the result of the company offering new common shares. This diluted the price of existing shares. Investors will be watching to see if the stock remains resilient by breaking out of its base. While you are watching the base form, study the cup with handle pattern so you can be prepared in the event of a breakout.

Cloud Peak is focused primarily on the United States Powder River Basin, but also has operations in other regions. Earnings growth is expected to slow for the next three years, so this would be a contrarian play. If you think deregulation will turn the coal industry around, the recent declines in the stock could make it look like a bargain to you.

Cloud Peak owns or controls 1.1 billion tons of reserves that are either proven or probable. It is developing projects in Wyoming and south Montana, and owns surface mines in both of those states.

As of this writing, Cloud Peak can meet its short-term debt payments because of its cash and other assets. However, its long-term debt is greater than its cash and assets. Revenues rose as of the June 30, 2017 quarterly report. Operating income turned positive. Investing in this stock would be done on the basis of expecting a resurgence in coal prices and further easing of regulations on the coal industry.

CLD’s market cap is $232.92 million, making it the smallest company on our list. It does not pay a dividend at this time.

  • Avg. Volume: 1,068,225
  • Market Cap: $232.92 million
  • PE Ratio (TTM): 5.18
  • EPS (TTM): 0.6
  • 1y Target Est: 4.30

2. BHP Billiton Ltd.

BHP Billiton (BHP) is a major miner of copper, iron, and coal. It also works in the areas of silver, lead, zinc, uranium and gold. The advantage with this stock is that it does not rely exclusively on coal, so it is less likely to suffer if the coal market takes a downturn. This is not a pure coal play, but it does offer the protection of a diversified product portfolio.

BHP made a steady climb throughout 2016, but it has been rising since late June of 2017. The 50-day moving average is crossing above the 200-day moving average. This indicates the stock may have some upside. Revenues, gross profit and operating income have been dropping for the past three years.

On April 5, 2017, BHP Billiton declared force majeure for its Australian operations, meaning it could not fulfill contracts because the railways were inoperable due to a tropical cyclone. A six-week strike at the company’s Escondida plant also hurt production. However, the company has extensive holdings across Australia, the Gulf of Mexico and Trinidad and Tobago. The likelihood of any single event causing the company serious harm is very low.

The company has a market capitalization of $107.47 billion. The dividend is 2.60%. Investors who are interested in this stock may be attracted by the dividend.

  • Avg. Volume: 2,565,629
  • Market Cap: $107.47 billion
  • PE Ratio (TTM): 43.91
  • EPS (TTM): 0.93
  • 1y Target Est: 36.97

3. Rio Tinto

Rio Tinto (RIO) is another company that mines other mineral resources besides coal. Its coal mines serve both the thermal (heating) and metallurgical (steel-making) industries. Like BHP, the diversity of products helps protect Rio Tinto from fluctuations in coal prices. The company explores worldwide for minerals and metals. It also processes aluminum, copper, diamonds gold, iron and uranium.

The stock price began dropping since mid-February 2017. The short-term moving average is moving downward toward the long-term average, indicating that this stock may have more declines in the near future. This is one to watch to see if it is forming a base that could result in a breakout later.

For investors seeking longevity, it is important to note that Rio Tinto dates back to 1873. Though it is based in London, the company has announced a major project in Western Australia that will create more than 1,000 jobs. In addition, it has a Silvergrass iron ore mine that has seen increasing activity in 2017.

On April 6, 2017, Rio Tinto learned that the Australian Taxation Office determined that the company owes an additional $447 million for the years 2010 to 2013. The company has disputed the amount.

RIO pays a dividend of 4.65%.

  • Avg. Volume: 3,279,282
  • Market Cap: $80.38 billion
  • PE Ratio (TTM): 17.82
  • EPS (TTM): 2.55
  • 1y Target Est: 54.38

4. South32 Limited

South32 Limited (SOUHY) was a part of BHP but now operates independently. South32 was previously called BHP Coal Holdings. The company mines other products besides coal, but it does provide coal to both the thermal coal and metallurgical coal industries.

The stock began a steady uptrend in mid-2016, and began a sideways price consolidation in 2017. It broke upward out of that base in July and looks like it has some upside potential.

This company operates in Australia, South America, and South Africa. It produces aluminum, coal, manganese, silver lead and zinc.

South 32 currently has a market cap of $12.3 billion and pays a 3.03% dividend. Average daily volume is only 50,770, so this stock may not be as liquid as larger stocks.

  • Avg. Volume: 50,770
  • Market Cap: $12.3 billion
  • PE Ratio (TTM): 16.84
  • EPS (TTM): 0.7
  • Dividend & Yield: 0.36 (3.03%)

The Bottom Line

No one is excited about coal, so this is a sector that may be overlooked. The four stocks could do well in the second half of 2017.

When following these stocks, it is important to follow not only coal, but other minerals the companies work with. None of these is a pure coal miner. Checking the price of a basket of minerals will serve better than simply checking coal pricing. (See also: A Primer On Coal.)

In addition, continue to monitor quarterly reports to see if any downtrend occurs in revenues or operating income. If a slip in those figures does develop, this could be an indication that the stocks are about to reverse the long upward trend they have been in.

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