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Tickers in this Article: CNX, YZC, FTEK, BTU, NRP, ACI
Oil just keeps going up and therefore, so too does interest in cheap, alternative energy sources. The first options that come to mind are often solar, wind, fuel cells etc. While these sounds great in theory, on paper the "green" energy options are still very costly and not widespread.

Coal vs. Green Energy
As countries throughout the world search for alternatives to oil they are stumbling upon two options that have been around for years: coal and nuclear. The demand for nuclear power has been increasing outside the United States and there are several investment ideas for investors looking to gain exposure to the area. (For more insight on intriguing nuclear power investments, see Power Up With Uranium.)

Meanwhile, coal has been around for hundreds of years and was the main energy source for the industrial revolution of the early 19th century. In recent years, the fossil-fuel has gotten a bad rap because of its environmental effects and the issue of mine safety. While both issues are extremely important, there are risks associated with the extraction of most energy sources.

The beauty of coal is in its supply -- there is enough coal in the world to supply energy for more twice as long as oil or natural gas. When the supply of oil runs dry there will still be coal in the ground. As we look to the future there are two major themes: clean coal and China.

The Future of Coal
The International Energy Agency predicts that China will account for 40% of all coal consumption by 2020. Today the United States and China account for over half of all the coal consumed in the world, but they also produce over 50% of the fossil-fuel. China's use continues to skyrocket as its coal imports exceeded its exports for the first time in the first quarter of 2007. The rapid growing economy in China will continue to demand large amounts of coal to power its expansion. In the end, the result will be higher prices due simply to supply versus demand.

New clean coal initiatives have been proposed by the U.S. government and agencies worldwide as the global warming issue hits the mainstream. In the fourth quarter of 2006 U.S. Energy Secretary Samuel Bodman announced $450 million in grants to be used over the next decade to lessen the impact of coal on the environment. As the process becomes more cost effective, more companies will begin to turn toward clean-burning coal.

Stocks in the coal business have been big movers the last few years; however, they have struggled in recent months. That was until the Dow Jones Coal Index broke out of a six-month consolidation pattern. The breakout and subsequent consolidation confirmed the sector is poised to move higher and start a new uptrend. Below are a few coal stocks to consider.

Coal Stocks
Consol Energy (NYSE: CNX) is the largest underground coal producer in the United States, and 82% of its revenue comes from the sale of coal. During its last conference call, the company said it expects coal inventory-levels at power plants in most regions to be at or below the five-year average by year-end 2007. If CNX is correct, the demand for coal will only increase, resulting in higher prices and larger profits for the coal stocks.

Peabody Energy (NYSE: BTU) is the world's largest private-sector coal-company, fueling about 10% of all U.S. electricity. The company has been expanding in Australasia and opened an office in Beijing, China, in the fall of 2005. With China now a net importer, BTU is well positioned to help supply the other countries in the region that are demanding coal such as India and Korea.

Natural Resource Partners (NYSE: NRP) takes a different path to profiting from the mining of coal. The company owns land which house coal mines and leases them to the mining companies. For example, Arch Coal (NYSE: ACI) is one of NRP's biggest lessees. The stock's chart didn't take the hit that other mining companies took last year and is now near an all-time high. On top of the strong relative strength, the stock also pays an annual dividend of 5%.

Yanzhou Coal Mining (NYSE: YZC) is similar to NRP in that it is closing in on a new all-time high and pays a healthy dividend of 2.6%. Many of the large U.S. coal miners are taking steps to benefit from the surge in demand from China, but what better way to play the boom than with a Chinese coal stock? The company is a leading coal miner in Eastern China where it not only supplies coal, but also owns a large stake in railroad assets.

A "Greener" Alternative
Finally, Fuel Tech (NASDAQ: FTEK) is one way investors can capitalize on the movement toward less harmful emissions. Fuel Tech has a product called NOxOUT that reduces nitrogen oxide in boilers. Over the last year, the company has made its way into China, and the possibilities of expansion are limitless in the enormous country.

When the masses are running to the oil and gas stocks, don't forget about coal. These stocks that have the potential for big profits in the next few years.

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