Fast Money's Coal & Nat Gas Trade
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Created by barrons3
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Date updated:03-18-2009

Concern is growing that power plants could soon dump coal for nat gas. Why? There are really two issues here. One is that power plants are facing new regulations concerning clean energy and coal generates huge amounts of carbon dioxide when it burns, which in turn leads to global warming. And two is the cost of nat gas. It’s plunged to 6-year lows. When nat gas was more expensive, coal was considered a cheap alternative but now that's not the case.

symbol name last price % change open
  • +
  • APA
    Apache Cp
  • $95.75
  • -2.25%
  • $94.84

“I don’t think this is a straight long trade,” says Terranova. Instead he suggests a pairs trade. "I would get long natural gas producers such as Apache (APA) and EOG Resources (EOG) and short coal,” he suggests.

People owning APA also tend to own: AMGNBACCCOPCVXDOWDRE

TheStreet.com Rating: C+ What is this?

  • +
  • EOG
    Eog Resources Inc
  • $87.23
  • -2.76%
  • $86.37

“I don’t think this is a straight long trade,” says Terranova. Instead he suggests a pairs trade. "I would get long natural gas producers such as Apache (APA) and EOG Resources (EOG) and short coal,” he suggests.

People owning EOG also tend to own: AAPLBRK-BCHKGLWIMMRTXNEPL

TheStreet.com Rating: B- What is this?

  • +
  • JOYG
    Joy Global Inc.
  • $53.52
  • -3.46%
  • $52.66

Still, Adami said he liked Joy Global(JOYG) because 80% of its coal plants are outside of the U.S. Karabell said with the heavy regulatory hand of the Obama administration in the coal industry, a company like Joy Global will benefit in countries like India and China, which rely on coal heavily as a cheap source of energy.

People owning JOYG also tend to own: BAXBOBJDELLEBAYHANSRMIXSBUX

TheStreet.com Rating: B What is this?

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