Why Shares of Arch Coal Inc. Dropped 11% Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Arch Coal Inc. plunged 11% today as energy stocks sold off because of the drop in oil prices.

So what: Oil fell 4.3% to $63 per barrel, and there seems to be no bottom in sight for the commodity. The risk for coal stocks is that rigs that have been drilling oil in the U.S. will shift to natural gas, pushing coal's biggest commodity competition lower.

Now what: This is just the latest in a long string of bad news for coal stocks, and it's an industry I think investors should avoid at all costs. Coal power plants are being shut down in droves, and with China investing in cleaner energy sources such as natural gas, solar, and wind, we could see coal exports to China peak in the next year or two. That spells disaster for coal companies, which is why I'm not a buyer even on today's dip.

The article Why Shares of Arch Coal Inc. Dropped 11% Today originally appeared on Fool.com.

Travis Hoium and The Motley Fool have no position in any of the stocks mentioned. 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 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.