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Coal Stocks: East Is Best

Fear-inducing oil prices have heated up the world's demand for coal, an abundant resource in the United States. No one knows that better than Jeremy Sussman, domestic coal analyst at Natixis Bleichroeder.

"There's an extremely tight global supply/demand shortage right now," he told CNBC. "On the supply side, you've got traditional exporting nations like Australia, where they're having major infrastructure issues; on the demand side, you've got places like China and India, that are vastly increasing their imports, so that leaves a nice spot for the U.S."

Sussman expects a doubling of America's coal exports over the three-year period ending in 2009.

Recommendations:

Among American coal producers, Sussman prefers those with their resources in the East.

"They're more directly levered to European exports, while the western names are more back-filling," he said. "Foundation [Coal Holdings] would be more of a western name; James River [Coal] is more of an eastern name."

His favorites are Patriot Coal, Peabody Energy, and Consol Energy.

Disclosure:

Sussman's firm makes an over-the-counter market in the stock of James River Coal.

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