(FORTUNE Magazine) – Oil may be grabbing all the headlines, but right now coal is one hot commodity. The sharply rising price of natural gas--coal's primary competition as a fuel for energy plants--has driven the spot price for Appalachian coal from below $30 per ton last fall to around $65 today. Coal shares have followed suit: The Dow Jones U.S. Total Market Coal index climbed 84% in the past 12 months. Still, analysts think the industry has plenty of upside left, arguing that years of underinvestment, continuing natural-gas supply constraints, and recent coal industry consolidation will ensure strong earnings for some time. "Fundamentally we're in the second or third inning, and the stocks are in the fourth or fifth inning," says David Khani, a veteran industry analyst at Friedman Billings & Ramsay. "But we may go into extra innings."

Khani is one of several analysts who like Consol Energy (CNX, $35), the largest Appalachian producer. Recently some underground "roof falls" have stung Consol's earnings, but Khani argues that the company remains attractive thanks to the long life span of its mines, its growing natural-gas business, and the fact that its high-sulfur-content coal will become increasingly marketable as utilities install sulfur-reducing scrubbers to comply with the 1990 federal Clean Air Act. "It's going up 25%, maybe as much as 50%, in the next few years," he says. -- Oliver Ryan