Britannia Radio

Dear Daily Crux reader, Our friend Marin Katusa is one of the world's best energy investors. Over the past few years, he's racked up one of the most impressive track records in the industry. Marin is the senior energy analyst for Casey Research, one of the elite research shops in the world. He’s a math genius with expertise and contacts in every corner of the energy industry. So when he singles out a particular energy sector as "cheap," "undervalued," and "carrying huge profit potential," it gets our attention. We caught up with Marin this week to get the details one of his favorite investment trends right now. It’s a play on the awesome and growing demand the Chinese have for electricity. You may notice this week's interview is a bit briefer than usual – Marin spoke with us as he was hopping on a plane for the first leg of a research trip to Kuwait, India, and Ukraine – but it could be one of the most profitable things you read this year. Good investing, Justin Brill Managing Editor, The Daily Crux www.thedailycrux.com –––––––––––––––––––––––––––––––––––––––––– The Daily Crux Sunday Interview Obama hates it... but it's one of the best buys in energy today The Daily Crux: We know you're intimately familiar with just about every sector of the energy industry, so when we heard you were especially bullish on one in particular right now, we knew we had to talk to you. What's the story here? Katusa: That's right. It's one of the best buys in the world, because it's unloved and almost completely overlooked right now, but absolutely essential to power our world... Of course, I'm talking about coal. Crux: Why is coal so cheap right now? Katusa: I think it's a reflection of the market. In the U.S., coal is used to produce 50% of the electricity. What that means is half of the lights in America depend on coal. Not many people know that... And the government wants to keep it that way. It doesn't want you to know that. Obama's been trying to promote this whole "green" push, but it hasn't quite worked. The government loans take a long time to get. The government process, the paperwork is extensive. So the green power, the clean power, isn't coming along as quickly as the administration would've liked. ---------- Advertisement ---------- A real secret of the world's richest family If you don't know about the world's richest family and how they built their fortune... It's an incredible story that could help you make 665% or more in the next few years – without touching stocks, bonds, real estate, or any other investment you've likely considered before. Click here for more information. -------------------------------------- Back in November 2008, we told readers that coal would likely be the place to be in about two years because of what was happening then. It was after the election, and we thought coal would be hurt by the administration's plans. There was a lot of talk about CO2, the carbon footprint of energy, and new energy taxes. And we thought it would hit the coal companies hard... people would start pricing that in. But we knew the government's green energy plans wouldn't work out on the timeline they were projecting... they never do. Eventually, people would wake up and realize we can't get by without coal. And that's basically what's happened. So investors have been coming back to coal. If Obama had his way, there'd be no coal generation; no electricity generation from coal power plants. But coal's here to stay. There's nothing that's even close to being able to replace it at this time. Plus, it's used for more than just electricity generation. There are two primary types of coal: thermal coal and metallurgical, or met coal. Thermal is used for electricity generation, and trades around $90 to $100 per ton. There are three types of met coal, all used for industry. You have your hard coking coal met coal, which trades at a premium. It's going for north of $225 a ton. Then you have something called semi-hard, which trades between $185 and $205 a ton. Finally, you have your semi-soft, which is your third ranking met coal, and it trades anywhere between $145 and $165 a ton. Met coal is essential for steel plants... for stainless steel because of the amount of energy that comes out of it. It's all about the BTUs it produces, and there's no replacement for it. If you're investing in the U.S., you want to stay away from thermal coal. Met coal is what you're interested in. Crux: Why is that? Katusa: The reason I want to stay away from thermal in the U.S. is because of the footprint... the footprint of the actual resource or mine. Thermal's a cheaper coal, so it's generally mined within an open pit, which has a very large footprint. In America, with the prevalent NIMBY concept – not in my backyard – it's next to impossible to permit and process a thermal coal mine. So in the U.S., you want to stick with the existing, producing coal mines or with companies that are developing met coal mines, because met has a much smaller footprint and the margins are just so much higher. Crux: What's your long-term outlook on coal? Katusa: I'm very bullish. Like I said, coal is here to stay for the foreseeable future. Met coal especially is here to stay in the U.S., but the emerging world is going to be using both for a long time. China is probably the biggest single reason to be bullish on coal. The Chinese appetite for coal is unbelievable – China alone is consuming over half of the coal produced in the world. And over 70% of China's electricity comes from coal generation... much more than in the U.S. Coal is all about fabrication. It's about industry. And China is where that's happening. I've seen stats that every week there's a new coal-fired plant coming online in China. So it's not going anywhere. Crux: Can you recommend a couple of your favorite companies? Katusa: Well, we've had some great early winners in this area that are up significantly since we recommended them. So I'd generally recommend waiting on a pullback to buy most of the companies in the sector, especially the smaller ones that have had big runs. But there's one that we really like right now: Corsa Capital. The symbol on that one is CSO.V on the TSX Venture Exchange. They're a Canadian company, but they're talking about listing in the U.S. The management team is literally the best in the business. Our readers are in that one already, but we still have it as a buy under $0.50, which is right about where it's trading now. It's our number one pick in coal right now. Crux: Sounds good. Thanks for talking with us, Marin. Katusa: My pleasure. Thanks for having me. Editor's Note: As we wrapped up our conversation, Marin mentioned there's another energy sector he likes just as much as coal. In fact, he thinks it's even more undervalued and may be the best buy in the world today. We figured you'd like to hear about this sector, too... So we've decided to turn this interview into a "two-part-er." Look for the conclusion in your inbox next Sunday. In the meantime, if you'd like to learn more about the rest of Marin's best buys, check out his top-performing advisory, Casey's Energy Report. You can learn more here.