Patriot Coal Corp. (NYSE:PCX)

weiteck (85.55) Submitted: 6/22/2009 10:21:12 AM : Start Price: $6.15 PCX Score: +93.09

Not for long term as there are better coal companies out there. target to bounce back to $7 to $8+ in 1-2 month's time when short term profit taking after a huge rally from Mar 09 subsides.

No liquidity risk but BTU spinning PCX out would mean that PCX's long term prospects are not as good. Most of coal mines are located in Central Appalachian. Higher costs of mining in these tough regions. Its coal are of poor thermal quality with 2/3 noncompliant coal. This is certainly not a good sign at least during Obama administration. About 20% of its revenue are from metallurgical coal. The use of such coal in US steel industry for furnace coke is declining because of better technology. This is not a good sign fo PCX. They may have to sell more to overseas steel industry.

A good sign is although the low natural gas price is driving the demand for coal down in some plants (natural gas was down to recent lows of $3+ from $13+ one year ago), it is now bouncing up from a technical analysis standpoint. It has close up the above 9week MA last week and I see natural gas prices moving higher.

Balance sheet wise PCX is still pretty ok but not something to boast about.