Alpha Natural Resources, Inc. (ANR)

I like the stock in the short-term. While limited history to base purchase on (one year)...they're trading at their cheapest valuation yet. Reason for it? Possibly...they've have been accumulating debt with acquisitions while retaining very little cash. However, give the energy sector a little momentum...get the market to start thinking about dire need for alternative energy...and this company is positioned to ride the optimism. Watch correlation to energy prices.

Long-term...I'm still worried/unsure of how coal processing will be handled. With the government's renewed concentration on limiting harmful emissions, the future of coal may be negatively affected. The question is...will a technique surface that allows coal to be refined in a clean (and cheap) manner? Has one already begun to surface that I don't know about? My gut feel is yes. With the amount of coal available...it quickly becomes one of the most viable alternatives.

great 30 day returns, great chart

Buying on the dip. Highest PE of any stock I've picked on CAPs at 123 so this is very unusual for me. The thing is these guys have pricing power and more supply available to sell so the PE is deceptive.

Coal is up !

Assuming the Cleveland Cliffs merger goes through by the end of 2008, this stock is woefully underpriced. It should continue to go up for the next several months, particularly as closing gets closer.

The only real reason I can see for worry about the merger is if Alpha gets a better offer, in which case the price will go up further.

Coal is in great demand but the lofty price of this stock will probably lead me to sell soon.

Coal is a necessary resource for many industries and this company is stable.

gut feeling

coal is hot

Coal will show stronger demand and new projects throught the summer.

COAL TOP SECTOR

Okay, the merger did not go through. I am disappointed. We must now value ANR as a stand alone company. Two metrics currently stand out about ANR. First, they have approximately $600 million in the bank. So that means they have about $8.50 per share in cash. They still should generate good cash flows even in a slow economy. Coal contracts are pretty clean (no pun intended). Second, they are expected to earn about $12.50 per share in 2009. Say we cut that estimate by one third, we get around $8.33 per share estimate (way below the lowest current estimate for 2009). We give ANR a 6 multiple. $8.33 times 6 equals =$49.98.

Wow! Yes, that would be a 152% return from today's closing price. My opinion, ANR is undervalued and very attractively priced. Remember, the yield curve is very steep. Every central bank in the world is printing money like wild men. We could see a huge rebound in commodities and selling prices.

Performance chasing. Wish me luck!

ND

One of the morals of Wall Street: Stay with the best of the best performing sector, and always keep your sell stop in tow @ 8-10%.

Technical pick.

Coal will be in demand until 2011, or even longer.

Demand for coal is far outstripping supply.

Whats not to like oil continues to go up and so will other energy sources and most other commodities. I see no downside for the next year at least, especially as summer wanes and the winter with heating needs comes closer.