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Adding this stock because it's HOT, HOT, HOT



July 08, 2010 – Comments (0) | RELATED TICKERS: CNX


Ole ole - ole ole / Ole ole - ole ole

Me mind on fire -- Me soul on fire -- Feeling hot hot hot  

Man it sure has been hot around here lately.  You can't flip on the local news for more than a minute without seeing a barrage of news about the recent heatwave, at least here in the Northeast. 

I'm not a huge fan of coal, but the recent hot weather that we have been experiencing has caused power companies to literally burn through their coal stockpiles.  

According to Genscape, coal consumption by U.S. utilities was up 18% year-over-year during the week ending 6/24/10.

In the Mid-Atlantic portion of the United States, power plants are down to 37 days supply of coal, much less than the 63 days' supply that they had during the same period a year ago.

Check out this quote from Consol Energy's (CNX), executive vice president of energy sales, Bob Pusateri, talking about a call the company received on 6/29 from a power company seeking two train cars full of coal in July:

“We gave them a price and after they stopped hyperventilating, they did not say no,” Pusateri said. “That tells me that things are starting to turn.”

“They’re burning coal like crazy and they’re going to have to replace it,” he said. “Every coal unit that can run is running.”

In June, PA coal averaged $59.85/ton, up a whopping 35% from the same period in 2009.  Coal was up nearly 6% on the Nymex, posting its best June since '08.

I am adding CNX to my CAPS (not real life) portfolio today at $36.46/share.  I don't plan on holding a position in a coal company like CONSOL (yes, I know that its's not just coal) long-term but it seems to me as though CNX could be prime for a solid rally if this hot weather keeps up.


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