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Why You Want Coal for Christmas

Finding a lump of coal in your Christmas stocking may not be as bad as you think, according to author Stephen Weiss.

The commodity has been on a tear and will only become more valuable, Weiss said. Coal stock piles for utilities continue to decline, he explained. If it's a cold winter, utilities are going to have to buy more coal and that will drive up the price. Meanwhile, Chinese demand continues to drive prices upward.

Weiss offered three ways to play coal:

Alpha Natural Resources : This is a cheap stock relative to other coal names, Weiss said. It is a "very well run company" that has plenty of reserves.

Massey Energy : Weiss likes this name as a speculative play. It comes with greater risk, but as a result, also offers a greater reward. The stock is down slightly, but he thinks it could see a 10 to 15 percent move to the upside.

Penn Virginia GP Holdings : If you're tired of watching your bonds errode, try PVG. While the 10-Year bond yields just under 3 percent, PVG offers a 6.4 percent yield.

Weiss' trades got backing from currency and commodities trader Dennis Gartman.

"The case for coal is very compelling," said Gartman, author of "The Gartman Letter," citing Chinese demand. "We have to remember that 45 to 48 percent of our electricity here in the United States is generated from coal. If we have any increase in GDP, you're going to get a pick up in coal."

Weiss co-founded a hedge fund, wrote "The Billion Dollar Mistake" and is currently working on a second investment book.

Watch the video to see the full conversation with Weiss and Gartman on coal.

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Trader disclosure: On December 1, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian owns (WFT) call spread. Pete Najarian owns (MEE) call spread. Pete Najarian owns (F) bonds. Pete Najarian owns (GDXJ) call spreads. Pete Najarian owns (GRS) calls. Pete Najarian owns (TCK) call spread. Pete Najarian owns (C), (PFE), (CNI) and (DOW). Karen Finerman owns (AAPL) and (BAC). Joe Terranova Owns (FCX), (UPL), (C), (PEP), (VRTS), (OXY), (AXP), (GS), (POT), (AAPL), (NKE) and (OIH). Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC) and (MSFT). Stephen Weiss owns (VZ), (MEE), (UPS), (JWN), (QCOM), (TBT), (COP) and (DVN). Steve Cortes is short (UNP). Steve Cortes owns (GS), (MS), (BAC) and (CME). Steve Cortes is short German DAX. Steve Cortes is long U.S. Dollar vs. Mexican Peso, Euro, Australian Dollar Steve Cortes is long U.S. 2-year treasury notes.

KAREN FINERMAN
Finerman’s firm owns (BKS)
Finerman & Finerman’s Firm owns (JPM)
Finerman & Finerman’s Firm owns (MSFT)
Finerman’s firm is short (IJR)
Finerman’s firm is short (MDY)
Finerman’s firm is short (SPY)
Finerman’s firm is short (IWM)
Finerman’s firm owns S&P 500 and Russell 2000 puts

JOE TERRANOVA
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (ALK)
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Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

GUY ADAMI
Adami’s wife works at Merck

MIKE KHOUw
Cantor Fitzgerald makes a market in (AAPL)
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DENNIS GARTMAN
Funds managed by Gartman own (MSC),
Funds managed by Gartman own (RJA)
Funds managed by Gartman own (BPT)
Funds managed by Gartman are short (DB)
Funds managed by Gartman are short the S&P 500
Funds managed by Gartman are short the Euro
Funds managed by Gartman are short the Japanese Yen
Funds managed by Gartman own Gold

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (RDC)
Accounts Managed By Kanundrum Capital Own (ARMH)
Accounts Managed By Kanundrum Capital Own (AAPL)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (QCOM)

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