We weren’t that early in recommending Alliance Resource Partners (NASDAQ: ARLP) and Alliance Holdings (NASDAQ: AHGP) in mid-June.

By then, it was already pretty clear (to us, at least) that the coal downturn had done its worst and that prices had plenty of upside given the unsustainably low price of natural gas, the primary alternative to coal in power generation. Those stocks were already up 50% from their February lows, and now they’re up roughly that much again since our call. You don’t have to catch the absolute bottom to run up big gains in after a historic collapse.

Of course, we also can’t go back in time and supersize our buy orders on these names. What we can do, though, is speculate on another group of coal mining companies that were either in bankruptcy four months ago or teetering on the brink.

They too are benefiting from lower operating costs and higher coal prices. And those that have gone through an insolvency have also come out with drastically pared debt.

Although some are already up a lot in a short time, they still trade at valuations suitable for recent bankruptcy restructurings emerging into a widely despised market sector enjoying what almost everyone sees as only a temporary respite from continued decline.

Like the Alliance complex a few months back, this is another favorable setup with an asymmetric return profile. The downside is constrained by the undemanding earnings multiples, while upside is potentially massive if the current pricing recovery merely persists into next year, as seems likely.

The notoriously volatile coal industry fundamentals are more of a moving target than ever right now. And the restructured companies are so new there’s little to go on in terms of forecasting their underlying earnings leverage. For some, the balance sheet, too, remains a work in progress.

So if you open up Excel and attempt to model the 2018 EBITDA for any of these, you’ll a) be wrong and b) take long enough to get all the imponderables wrong to miss out on all the fun.

Instead, find all the comfort you’re entitled to in an aggressive speculation in knowing that these are underfollowed names in a hated sector enjoying a widely dismissed cyclical rebound. These equities are priced to get them off the books of creditors who never wanted them and into gamblers’ portfolios.

Hence the opportunity. Rather than insist on unreasonable certainty that any one of these will work out, we’re taking a portfolio approach and adding three undervalued coal stocks to the Aggressive Portfolio.

Arch Coal (NYSE: ARCH) emerged from nine months of bankruptcy proceedings on Oct. 5 as the second largest U.S. producer of thermal coal and the leading supplier of the more valuable metallurgical, or met, coal used to produce coke, a key ingredient in steel.

The restructuring allowed it to pare a $5 billion debt load by 93% to $363 million, offset on the relaunched balance sheet by $300 million in cash. As a result, the annual interest expense will be down to $33 million, from $362 million pre-bankruptcy. Operating costs at its met coal mines are down 30% over three years.

Next year Arch plans to produce 7 million to 7.5 million tons of met coal, which roughly tripled in value during its spell in bankruptcy to recent multi-year highs at roughly $200 per ton. The surge has been prompted by booming Chinese steel production, shutdowns of unprofitable U.S. mines that have reduced domestic met coal output by a third since 2014 and, more recently, Chinese mine closures.

Source: Arch Coal

Arch also mines thermal coal in Wyoming, Colorado, Illinois and Appalachia, recently at a rate of approximately 100 million tons annually. But the higher-priced and higher-margin met coal accounts for much of its earnings leverage.

At an assumed price of $92.50 per ton for its 6.4 million tons of uncommitted met coal output next year, the company projected its 2017 EBITDA at $141 million in June. But if we assume an average of $140 per met coal ton next year (30% below the current spot price), annual EBITDA would exceed $340 million, based on the sensitivity analysis provided by management. On that basis, the company is currently being valued at 6x next year’s EBITDA and a free cash flow yield of approximately 13%. Arch is the premier U.S. play on the global met coal rally. Buy ARCH below $90.     

If Contura Energy (OTC: CNTE) doesn’t ring a bell, that’s because it was formed just three months ago as part of the restructuring of the insolvent Alpha Natural Resources, previously the second-largest U.S. coal miner. Owned mostly by ANR’s top-tier creditors, Contura ended up with its predecessor’s most attractive assets and net debt of just $250 million, vs. ANR’s $7.3 billion in liabilities when it filed for bankruptcy.

Source: Contura Energy

Contura’s 11 Appalachian mining complexes and two open pit mines in Wyoming’s Powder River Basin have shipped nearly 34 million tons of coal over the last year, including 3.1 tons of met coal. The Pennsylvania and Wyoming mines produce thermal coal for domestic power plants while those in Virginia and West Virginia extract met coal, primarily for export.

Contura also ended up with 1.4 billion tons of proven and probable coal reserves and ANR’s majority stake in a Virginia coal export terminal, as well as all of Alpha’s key executives.

The company’s assets produced $121 million of EBITDA in the first half of 2016, which was projected to increase to $268 million for all of 2017 as of July, based on coal prices that have since moved up.

Based on its estimated current market value of $710 million for its 10 million listed shares, $250 in net debt and a reasonable $300 million EBITDA guesstimate for next year, Contura currently trades an EV/EBITDA multiple of 3.2. If met coal prices that have tripled this year hold those gains, earnings could be materially higher.

Management’s initial projections call for steady revenue and annual EBITDA growth of 2-3% over the next four years. Contura is committed to listing on a recognized exchange and to selling at least 10% of its equity on behalf of the major shareholders in a public offering during the first half of next year.

The unit price has tripled in thin over-the-counter trading since early September, but continues to value Contura below comparable rivals. There has been no sell-side coverage to this point.  Buy CNTE below $85.

Foresight Energy (NYSE: FELP) is a master limited partnership producing specializing in high-quality thermal coal. Its four mining complexes in the Illinois basin produced 8.8 million tons in the first half of 2016, an 18% drop from a year earlier in line with diminished power industry demand that has since rebounded. Realized prices held firm even then at $44 per ton, nearly double the cash cost of FELP’s output.

Source: Foresight Energy

Unlike Arch and ANR, Foresight has avoided bankruptcy. But it was still forced to restructure its debt after an equity investment in its general partner by Murray Energy triggered a change of control clause entitling its bondholders to cash out.

The subsequent liquidity crunch forced the partnership to suspend its quarterly distributions, though they continue to accrue and could well be paid off with arrears once the balance sheet is on firmer footing.

Restructuring talks with bondholders finally produced a settlement in August. It replaced $600 million of senior notes due 2021 with two new securities. FELP now owes $350 million on notes still maturing in 2021 but paying an increased cash interest rate of 9%, rising to 10% in 2018. It also owes $300 million on notes earning an annual interest rate of 15%, payable in additional FELP equity, until October 2017. Then those notes must be paid off,  or else their holders end up with 75% of total FELP equity.

Between the suspended distribution, refinancing worries and the coal industry’s epic slump, the share price slumped from nearly $18 in March 2015 the day the Murray investment was announced to barely more than a $1 last March. It has since rebounded to $6, about where it was a year ago. But the underlying earnings power has only eroded in line with the 20% decline in revenue year-over-year.

During the June quarter the marked the bottom of the downturn, I estimate FELP still generated 42 cents per unit of cash flow, which at $6 per unit works out to a 28% annualized yield, not that FELP is likely to pay any of that out over the next year.

The play here is to speculate on a refinancing next year that doesn’t turn over the bulk of the equity to current creditors. By 2018, under the terms of its debt restructuring, FELP should be able to start making up on its dividend arrears to common unitholders.

Those arrears are accumulating at the minimum quarterly distribution rate of 33.75 cents per unit. Once FELP pays out the minimum for three years in a row or a little more than $2 per unit in the course of a year, the sponsor’s subordinated units will vest, doubling the unit count and halving the cash flow available to limited partners.

Between the current moratorium on income and the potential dilution from subordinated units, the refi risk and the danger of a renewed coal downturn, FELP certainly falls into the “cheap for lots of reasons” pile. It doesn’t help that unitholders remain liable for taxes on the income the partnership reports even though they’re not getting paid at the moment.

But the equity could easily double in price over the next year with a bare minimum of luck rather than a real coal boom. And that outcome seems considerably more probable than a unitholder wipeout at this point. Buy FELP below $7.50.