Coal: Can you dig it?

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It’s no secret that U.S. utilities are closing coal-powered plants as they switch to natural gas in the face of high retrofitting costs to clean up emissions. But despite the domestic decline, coal remains in demand abroad.

Chinese companies particularly are eager to buy U.S. coal. Energy Information Administration expects worldwide coal demand to jump by 50 percent to 10 billion tons by 2030, led by demand in China, which already accounts for nearly half of the world’s coal consumption. 

Experts with whom we spoke point to three coal producers—Peabody Energy (NYSE: BTU; Price: $19.52), Arch Coal (NYSE: ACI; Price: $5.38) and Cloud Peak Energy (NYSE: CLD; Price: $15.78)—that could overcome declines in domestic sales as exports rise, because they are the top U.S. coal producers. Mike Kapsch of Investment U Research, which is a financial-education website, also suggests that investors keep an eye on Walter Energy (NYSE: WLT; Price: $32.85), because the company is a leading producer of metallurgical coal, which is used in steel production. Nearly 90 percent of the company’s sales comes from overseas markets.