Further to our piece on ARLP earlier this week, Marketwatch has a nice piece canvassing coal’s “very bad year.”

“There’s market capitulation and then there’s market carpet-bomb capitulation in coal,” said Byron King, editor of Agora Financial’s Outstanding Investments newsletter. “Coal is so far down the pits that it is hard to imagine the sector seeing daylight.”

Alpha Natural Resources Inc., which was one of the largest U.S. coal producers, filed for bankruptcy protection in August.

Last month Rio Tinto PLC RIO, -2.81%  said it would sell its stake in a large Australian coal mine, the head of BHP Billiton Ltd.’s BHP, -3.72%  coal business warned that depressed prices may continue to plague the industry for some time to come, and J.P. Morgan offered a downbeat outlook for coal prices.

And just this month, Moody’s Investors Service issued a weak forecast for the coal industry.

Coal is also among the assets produced by Glencore PLC GLEN, -4.59% which has been suffering under the strain of staggering debts on the back of the wider slump in commodity prices.

Some “key players are in bankruptcy or moving towards the courthouse,” said King. “it’s not a place for new money, that’s for sure.”

Year to date, the Dow Jones U.S. Coal Index DJUSCL, -0.57%  has taken a whopping 69% hit, while the Market Vectors Coal exchange-traded fund KOL, -3.29%  has lost roughly 37%.

The coal market has suffered from what King referred to as two different “coup de graces.”

Prices for renewable energy, including wind and solar, has been falling and government subsidies make them a “formidable competitor,” said King.

“Then there’s low natural-gas prices, meaning that it is possible to fuel-switch to pipelines and gas turbines to generate electric power.”

But coal’s not dead yet.

Alliance Resource Partners, L.P. (ARLP) is aTulsa, Oklahoma-headquartered coal producer operating 10 underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia, and one of the cheapest stocks in the All Investable Screener.

Saibus research have stepped into the breach with a website and report called “Understand ARLP:”

Alliance Resource Partners (ARLP) is a deeply undervalued and overlooked company due to the perceived uncertainty in the coal industry. At the current price, it is a highly asymmetric bet, with negligible downside but huge potential upside.

Marketwatch continues:

Matthew Wolfer, an analyst at Boston-based Saibus Research, pointed out that “because of geography and delivery-ability…and current capacity, it is very hard to see coal’s share of total U.S. electricity generation going below around 30% over the course of the next 10 years.”

Most coal plants are several decades old so their capital costs are low, he said, suggesting that paying operational costs for an already existing coal plant could be much more appealing to a utility company than paying to have a new natural-gas plant built.

Natural gas isn’t the biggest threat to coal because there are infrastructure and capital costs involved, said Wolfer. “Competitive natural-gas prices have forced some of the older and less-efficient coal plants to be grandfathered in, but the ones that stand now are here to stay.”

Looking ahead, the coal market’s biggest worry will be environmental regulations, but it is tough to determine how tight the government will be on those issues in 30 or 40 years, he said.

“For the next decade or two, however, coal is going to be essential to delivering affordable electricity to U.S. families,” Wolfer said.

See the website and download the report.

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