Coal Stocks to Rebound on New Executive Order

Will coal stocks rebound on Trump’s new executive order?

Not a chance in hell.  This, despite coal stocks temporarily soaring on the announcement. 

Let me explain…

Last week, President Trump announced his latest executive order, entitled, Reinvigorating America’s Beautiful Clean Coal Industry and Amending Executive Order 14241

The executive order itself is as absurd as its name.

The purpose of the executive order, as explained in the press release, is as follows…

In order to secure America’s economic prosperity and national security, lower the cost of living, and provide for increases in electrical demand from emerging technologies, we must increase domestic energy production, including coal. Coal is abundant and cost effective, and can be used in any weather condition. Moreover, the industry has historically employed hundreds of thousands of Americans.

To be fair, I certainly appreciate any effort to “secure America’s economic prosperity and national security, lower the cost of living, and provide for increases in electrical demand from emerging technologies.”  But coal is not going to cut it.

Truth is, coal is simply no longer competitive.  This, as a result of major advancements in renewable energy, energy storage technologies and innovations in drilling technology that pushed natural gas prices to record lows.

The combination of all these things essentially priced coal out of the picture.

In 2000, coal boasted 51% of this country’s energy mix.  Today it’s 16%.

Indeed, burning coal to create electricity is just too cost prohibitive to be competitive.  Moreover, coal-fired power plants are incredibly expensive to build and operate.  And in some cases, just transporting coal can cost more than the mined coal itself.

Even if Trump wants coal to be king again, it’s not going to happen. While the president has proved to be quite effective at getting what he wants, even he can’t rewind time to make renewable energy and natural gas more expensive.  And that would be the only way coal would have a chance at competing effectively.

Of course, one should also understand that much of this is showboating.  An opportunity to convince those who don’t know any better that Trump is going to make electricity cheaper by artificially propping it up.  Attempting to do so would be like attempting to get Americans to use typewriters and rotary phones again. 

Now this doesn’t mean coal will go gently into that good night.

Today’s modern coal-fired power plants will continue to operate until it’s no longer economically feasible to do so.  So essentially, there will still be a market for a handful of coal stocks, such as Alliance Resource Partners (NASDAQ: ARLP) and Peabody Energy (NYSE: BTU).

But mark my words: coal has a very limited future ahead.  In 2024, coal represented only 16% of our energy mix.  2024 was also the year that solar and wind generated more electricity than coal.

By 2040, coal will represent less than 10% of our energy mix, with renewable energy and natural gas controlling most of the market, coupled with a revitalization of our nuclear power industry.

The latter is actually quite exciting from an investment perspective, as there are a number of ways to play it.  Although I’m particularly bullish on this small engineering firm that’s developed a new uranium enrichment process that’s actually being backed by Bill Gates, Warren Buffett and the U.S. Department of Energy.

And here’s the best part…

This one company is the only company capable of providing this new form of uranium enrichment.  It basically has a monopoly on the next generation of nuclear power.  Which is why I highly recommend you get a piece of this action for yourself.

Bottom line: long-term, coal is a sucker’s bet.  Next generation nuclear is where you’re going to get the most bang for your buck.  And this is the way to play it.