Multiple sell-side
analysts keep talking about the thermal coal recovery, but Wall Street
seems to be responding with “that's okay, after you...”. On a six-month,
year-to-date, and three-month basis, the shares of most of the major
U.S. coal producers are in the red, with the met-coal miners like Peabody (NYSE:BTU), Arch Coal (NYSE:ACI), and Alpha Natural (NYSE:ANR) under-performing the thermal-focused Cloud Peak Energy (NYSE:CLD).
It's true that natural gas prices have risen of late, making coal more
cost-competitive. It's also true that coal inventories have been worked
down at utilities and that miners have been relatively responsible in
idling marginal mines.
It's still not abundantly clear that Cloud Peak Energy offers a great
opportunity today. While this is a very well-run miner with solid
assets, the counter-intuitive reality is that it's offer the lesser
operators that see the biggest stock price improvements early in a
recovery. It's also not certain that this “recovery” has legs or will
show up in the numbers anytime soon, as there is ample capacity, prices
are still weak, and margins are very thin. While I think Cloud Peak is
on balance a good play on an eventual thermal coal recovery, investors
are going to need patience for this stock to work.
Please continue here:
http://www.investopedia.com/stock-analysis/061413/cloud-peak-energy-may-have-steeper-road-recovery-cld-aci-btu-anr.aspx
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