There was a time, not all that long ago, when some of the hottest stocks to buy were coal stocks. Between demand for energy and for the metallurgical coal used in making steel, demand was super-high, not only here, but around the world as well. That all changed, and as recently as just a few years ago, the industry was on life support, especially when candidate Hillary Clinton famously declared on the campaign trail “We’re going to put a lot of coal miners and coal companies out of business.”

There has been a big resurgence in coal use and demand since then, with prices being driven substantially higher by overseas demand, especially from India. A new Jefferies research report notes the increase in demand and pricing and also points out that the top companies are buying back their own shares in a big way:

We have increased our seaborne coal price forecasts to reflect supply constraints and a positive demand outlook. Chinese supply growth is a near term risk, but a sustainable collapse in seaborne prices is unlikely. Longer term, demand growth in India and other emerging markets should more than offset a decline in demand in the developed world and China.

While demand and the product itself will perhaps never be what it once was, the Jefferies team is very positive on four top companies based here in the United States. All four stocks are rated Buy.

Arch Coal

This stock was tagged pretty hard back in April and is offering a great entry point. Arch Coal Inc. (NYSE: ARCH) is engaged in the production of thermal and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and steel producers in the United States and around the world. As of December 31, 2016, it operated 12 mines located in each of the coal-producing regions of the United States.

The company’s segments include the Powder River Basin segment, containing the company’s primary thermal operations in Wyoming; the Metallurgical segment, containing its metallurgical operations in West Virginia, Kentucky and Virginia; and the Other Thermal segment, containing the supplementary thermal operations in Colorado, Illinois and the Coal Mac thermal operation in West Virginia.

Shareholders receive a 1.88% dividend. The Jefferies price target for the shares is $110, and the Wall Street consensus target is $100.63. The shares closed Wednesday at $85.62.

Consol Coal Resources

This is a smaller cap company on which aggressive investors could build a big position. Consol Coal Resources L.P. (NYSE: CCR), formerly known as CNX Coal Resources, is a producer of high-British thermal units (Btu) thermal coal. It is engaged in the management and development of coal operations of CONSOL Energy in Pennsylvania.

Consol holds interest in and operational control over CONSOL Energy’s Pennsylvania Mining Complex, which consists of three underground mines and related infrastructure that produce high-Btu bituminous thermal coal that is sold primarily to electric utilities in the eastern United States. It mines its reserves from the Pittsburgh Number eight Coal Seam, which is a contiguous formation of uniform, Btu thermal coal. Its Bailey Mine is located in Enon, Pennsylvania. Its Enlow Fork Mine is located directly north of the Bailey Mine.

Shareholders receive a massive 12.73% distribution. Jefferies has a $20 price target, and the consensus target is $18.50. Shares closed Wednesday at $16.10.

Peabody Energy

This is the top pick at Jefferies and one of the best-run companies in the industry. Peabody Energy Inc. (NYSE: BTU) is engaged in the mining of thermal coal for sale primarily to electric utilities and metallurgical coal for sale to industrial customers. Its mining operations are located in the United States and Australia.

Peabody’s segments are Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, Trading and Brokerage, and Corporate and Other.

The company also markets and brokers coal from other coal producers, both as principal and agent, and trades coal and freight-related contracts through trading and business offices in Australia, China, Germany, India, Indonesia, the United Kingdom and the United States.

Shareholders receive a 0.98% dividend. The $55 Jefferies price target is higher than the $49.00 consensus estimate. Shares closed Wednesday at $46.80.

Ramaco Resources

This is another smaller cap play in which a sizable position could be built. Ramaco Resources Inc. (NASDAQ: METC) is a development-stage company. It is a developer of metallurgical coal in central and southern West Virginia, southwestern Virginia and southwestern Pennsylvania.

The company’s project portfolio includes Elk Creek, Berwind, RAM Mine and Knox Creek. As of December 29, 2016, the Elk Creek property in southern West Virginia consisted of approximately 17,128 acres of controlled mineral. The Berwind coal property sits on the border of West Virginia and Virginia. As of December 29, 2016, the Berwind coal property consisted of approximately 31,200 acres of controlled mineral.

Jefferies has a price target of $10.50. The consensus target is $10.07, and shares closed most recently at $8.28.

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This is clearly one of the most contrarian trades an investor can put into an account now. With that in mind, the huge demand, especially from India, and the increase in demand for metallurgical coal for steel production is a positive that can’t be overlooked. These stocks are better suited for portfolios with a high risk tolerance.

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