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Time to start nibbling at Coal?



July 17, 2013 – Comments (5) | RELATED TICKERS: WLTGQ , ANRZQ , MTL

I suspect that coal is probably the most despised commodity at the moment.  The President certainly hates it.  But as I mentioned elsewhere, I suspect that once we start exporting nat gas in earnest nat gas prices will rise possibly considerably since it will be competing with much higher world prices hence making thermal coal actually cheaper to use.

With all the production in the shale for oil I was expecting oil to actually decline once supply started hitting the East Coast.  Instead it has gone up closing the gap between WTI and Brent.

Maybe it is the masochist in me but I tend to look at stocks making new 52 week lows than stocks making new 52 week highs.  My thinking is I probably missed my chance with those highs but with the lows, with patience, I may find some great opportunities.

Just look at the price declines of some of these coal stocks.  In 2008 ANR was over $100 and is now $5.59.  WLT just from 2011 was selling over $140 and is now selling $12.46.  ACI was over $70 in 2008 and now is $3.92.  MTL was over $57 in 2008 and is now only $3. JRCC was $50 in 2008 and now is $1.84.

ARLP has actually held up well and PVR with their transformation to pipelines may get an extra boost down the road for their coal royalties.

With a long term view in mind, and with my thesis that exporting lng may actually turn into a catalyst for coal, it might be time to nibble.


5 Comments – Post Your Own

#1) On July 18, 2013 at 9:07 AM, rd80 (94.67) wrote:

I've thought, and been wrong, that coal has been beaten down too much for some time.  I've got BTU as a CAPS pick and own some.  It's been one of the worst performers for me both in CAPS and real life. 

With the caveat that I've been very wrong, I do think there's value in coal, particularly companies with met coal production and exports to India, China and other developing markets. 

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#2) On July 18, 2013 at 10:26 AM, Teacherman1 (< 20) wrote:

I personally would not invest in coal companies, simply because I don't like what they do to the air we breath, but having said that, you might want to look at the "low sulphur" companies, which should be more in demand than the others.

You might also want to take a look at FTEK, which could benefit from the continued use of existing coal generated power plants, and the likelyhood that the EPA will get more agressive about forcing them to reduce their emissions.

I too like buying stocks that are "down, but not out", so you may be on to something there.

Coal use is not going away, simply because it costs much more to build new gas generated plants than it does to "clean up" existing coal plants.

Good luck in your efforts to profit from these companies.

JMO and worth exactly what I am charging for it.

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#3) On July 18, 2013 at 5:41 PM, awallejr (36.64) wrote:

Well coal actually did well today on average.

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#4) On July 19, 2013 at 10:47 PM, rd80 (94.67) wrote:

Some technicals on three coal stocks.

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#5) On July 19, 2013 at 11:58 PM, awallejr (36.64) wrote:

Yeah  the 3 he mentioned I like.  WLT and BTU mainly because you still get a dividend.  ACI because it is a low sulphur coal producer.

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