While demand for coal is expected to fall long-term amid concerns over climate change and a shift to other fuels, the sector still remains pretty hot. Here are some basics for those considering an investment in coal.
Coal is a rock that’s predominantly made of carbon. Its combustible properties make it useful to burn for fuel and accounts for almost 40% of the world’s electricity generation.
Ten countries produce 90% of the world’s coal, with China, India and the United States leading the pack. Despite a growing climate change movement and calls for green energy, the coal demand is forecast to remain stable into 2024.
Coal stocks include companies that mine and process coal for electricity plants and steel production.
China consumed over 50% of the world’s coal production in 2018, according to the BP Statistical Review of World Energy. While the global coal demand should remain stable for a while, China’s coal demand could peak in 2025.
High demand for this fossil fuel is likely to bump coal stock prices in the foreseeable future. So although coal won’t be the dominant energy source that it once was during the Industrial Revolution, it’s not going anywhere yet.
Coal stocks face three primary obstacles:
Many coal stocks trade on the New York Stock Exchange. But certain stocks, including China Shenhua Energy, are only available over-the-counter or from an international exchange.
Select a company to learn more about what it does and how its stock performs, including market capitalisation, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.The only ETF tracking the coal industry shut down recently. So ETF investors can’t find a clean-cut coal play.
Coal stocks could be a solid short-term investing opportunity. Demand should steadily increase in the coming years, but keep your eye on renewable energy and natural gas that’s slowly inching toward a bigger piece of the energy pie.
To invest in coal, compare trading platforms to open a brokerage account.
To make comparing even easier we came up with the Finder Score. Costs, features, ease and range of investments across 30+ platforms are all weighted and scaled to produce a score out of 10. The higher the score the better the platform – simple.
Read the full methodologyAll investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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