Arch Coal, Inc. (NYSE:ACI)

CAPS Rating: 2 out of 5

The Company's primary business is the production of steam and metallurgical coal from surface and underground mines throughout the United States, for sale to utility, industrial and export markets.


Player Avatar jed71 (88.57) Submitted: 9/4/2012 12:25:51 PM : Outperform Start Price: $5.72 ACI Score: +35.01

I readily admit this is a dangerous pick. Arch Coal could certainly continue its southward move and I am probably catching a falling knife. It seems like everything is against this pick right now - political environment, mining safety concerns, government regulation, and poor recent performance.

But I am a long term believer in most commodities (my two favorites - gold and silver). We here in the US have not built a new nuclear power plant in forever. And while coal may not be the cleanest option, it continues to provide around 40% electric power in the US. And the appetite for coal in Asia, particularly China, is still exceedingly strong. While I am a believer in nuclear power and natural gas, coal is not going anywhere for quite some time. The permitting process for new nuclear and natural gas plants is extremely difficult. I hope this changes soon, but I have little faith this red tape will be reduced or eliminated to allow for new plants ot be built in the US.

The financials are also not horrible. They are trading around 0.4 book right now and sitting on about $500MM in cash. They also continue to produce decent operating cash flows, which I think will continue to improve in the coming quarters. My belief is the value of these shares is around $15, if not a little higher. Disclosure: I do not own in RL yet but am watching carefully for my first buying opportunity.

Report this Post 3 Replies
Member Avatar papopeye (36.54) Submitted: 10/15/2012 7:14:52 PM
Recs: 0

Arch Coal is probably at or near its bottom. Personal belief is that if Romney wins that the coal producers will be a major beneficiary.

Member Avatar griffbos (< 20) Submitted: 10/16/2012 12:43:12 PM
Recs: 0

Think this stock is near bottom along with ANR, these two coal companies have been beat down more by short traders than by investors, once they finish holding them back one will see a raise regardless of who wins in Nov.

Member Avatar griffbos (< 20) Submitted: 10/16/2012 1:06:32 PM
Recs: 0

News from the 10/4/12 quarterly coal report which supports those making the call coal companies have an upside

•U.S. coal exports totaled 37.5 mmst, 31.1 percent higher than first quarter 2012 and up 39.1 percent from second quarter 2011 level. U.S. steam coal exports totaled 17.4 mmst, 56.2 percent higher than the prior quarter. U.S. metallurgical coal exports were 20.2 mmst, 15.1 percent above the first quarter 2012 level.
•U.S. coal production during the second quarter 2012 totaled 241.4 million short tons (mmst). This was 9.4 percent lower than the previous quarter and 8.7 percent lower than the second quarter 2011. The most significant decrease was in the State of Wyoming, where production declined by 16.8 percent from first quarter 2012 and 13.8 percent from the second quarter in 2011.

this is from 10/4/12 quartley coal report with production down yet export demand up look for coal prices to creep up , putting more cash in company hands whilerunning inventories down

also in the report
•Total U.S. consumption was 201.3 mmst for the second quarter 2012. This was 2.7 percent lower than in the first quarter 2012 and down 16.3 percent from the second quarter 2011 level.

seems the big switch to nat gas was more hype than truth

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