Oil seems to hit a new high every day but there are alternatives out there and one of them is coal. Yet for some reason the coal companies are doing terribly. Today, Arch Coal reported a quarter that “no one liked” – now expectations have been lowered and Cramer wants to know what’s up. He got Arch Coal CEO Steven Leer on the line to find out why anyone should buy coal companies that are performing so dismally.
Coal supplies 50% of our energy and electric generation, Leer said, and that number is projected to grow. Arch Coal alone contributes approximately 11% of the annual U.S. coal supply, but the company still guided down. Oil and coal used to trade relatively parallel to each other, but now Arch and other coal companies are getting slaughtered – and oil and oil services companies are reaping the benefits.
There is indeed a divide, Leer said. Oil, natural gas and coal are all disconnected right now, but the bottom line is that the world needs more energy and it is going to call on all three resources to get the job done. Investors might just have to be patient. “The disconnect can continue for a while but at the end of the day we’re using more coal,” Leer said.
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