Unearth Profits From King Coal With Mine Safety Appliances
Coal is enjoying a massive surge in usage in emerging-market nations such as China, India, and Russia. For Fools who want to get in on the action, Mine Safety Appliances (NYS: MSA) is an appealing choice that profits when the coal sector is strong, but doesn't collapse when it is weak.
Mine Safety produces equipment used in mining, national security, fire service, and construction operations around the world, giving it both product and geographic diversity. The company has surged in recent market action while the share prices for major coal companies such as Peabody Energy (NYS: BTU) and Arch Coal (NYS: ACI) , along with the exchange-traded fund for the coal sector, Market Vectors Coal (NYS: KOL) , have all plunged over the past year.
"
Value, growth, and income in one stock
It's difficult to find one stock that meets the objectives of growth, value, and income investing, but Mine Safety does. Earnings-per-share growth has increased for the past five years, year, and quarter, which is a very bullish trend for Mine Safety because of economic growth around the world. The forward price-to-earnings ratio is also solid at just 13.
Metric | Mine Safety Appliances | Peabody Energy | Arch Coal |
|---|---|---|---|
EPS Growth, Past 5 Years | 1.62% | 12.18% | (16.26%) |
EPS Growth This Year | 81.16% | 28.04% | (23.75%) |
Projected EPS Growth Next Year | 20% | 4.47% | (53.30%) |
Forward Price-to-Earnings Ratio | 13 | 15.48 | - |
Source: Motley Fool CAPS.
In addition to the superior growth and income valuations, Mine Safety pays a sturdy dividend. The dividend yield is about twice as high as Arch Coal's or Peabody Energy's and 50% more than that for the average member of the Standard & Poor's 500 Index. A favorite of Motley Fool Income Investor, the dividend of Mine Safety has been increased annually for more than 40 years.
Metric | Mine Safety Appliances | Peabody Energy | Arch Coal | Market Vectors Coal |
|---|---|---|---|---|
Dividend Yield | 3% | 1.30% | 1.50% | 1.90% |
Dividend Payout Ratio | 45% | 10% | -- | -- |
5-year Dividend Growth Rate | 5.18% | 7.79% | 8.87% | 25.68% |
Source: Motley Fool CAPS.
Global and product diversity
Mine Safety also has a broad product and geographic business model. Sales are divided into three regions, with North America making up almost half of the total. The biggest grower, by far, has been international sales to Asia, Africa, and Latin America. About two-thirds of coal is consumed in Asia, where the great bulk of global growth will most likely take place, particularly when India and China reignite their economies. That situation allows for shareholders to profit from the growth of Mine Safety in many different markets around the globe, including the fastest-expanding ones with the biggest populations.
Metric | North America | International | Europe |
|---|---|---|---|
Total Yearly Sales | $464 million | $261.1 million | $251.1 million |
Percentage of Total Sales | 48% | 28% | 24% |
Increase from Previous Year | 7% | 20% | (3%) |
Source: Motley Fool CAPS.
Further diversifying the business model and protection for investors are the product segments. The three main units -- industrial head protection, portable gas detectors, and self-contained breathing devices -- constitute almost 80% of the sales. Usage, wear and tear, and regulatory requirements ensure that sales are ongoing.
Not sure about Elvis, but King Coal will be back
Since 2000, coal consumption has risen faster than that for any other fuel, according to the World Coal Association. When global growth reignites, there will be a greater demand for oil -- and when oil prices rise, coal will become even more attractive as an energy source. Mine Safety will light up the portfolios of its shareholders will a glowing total return as a result.
There are many different ways to play the energy sector, and our analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations and poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out our special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this company before the market does. Click here to access your report -- it's totally free.
The article Unearth Profits From King Coal With Mine Safety Appliances originally appeared on Fool.com.
Jonathan Yates and The Motley Fool have no positions in the stocks mentioned above. Motley Fool newsletter services recommend Mine Safety Appliances. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
