Thursday, July 31, 2014

Seeking Alpha: Cloud Peak Energy Still Generating Cash In A Tough Market

I had my doubts earlier this year as to whether the optimism over coal would last and it hasn't - the major pure-play producers are all looking at double-digit declines in their stocks. I did think that Cloud Peak Energy (NYSE:CLD) was better-positioned than most and the shares have performed relatively better - down about 12% versus a nearly 20% decline for Peabody Energy (NYSE:BTU), a 30% decline for Arch Coal (NYSE:ACI), and a nearly 50% decline for Alpha Natural Resources (NYSE:ANR).

Is this the right time to jump back into Cloud Peak? I continue to believe that Cloud Peak has the best long-term cost structure of the U.S.-based miners and that Powder River Basin coal (which is all that the company mines) will be the "last man standing" even if utilities turn even more toward gas and renewables for the long term. The upside here if thermal coal prices recover is pretty attractive, not to mention the long-term upside of Asian exports, but this is an idea where investors have to be willing and able to wait a while for the value opportunity to develop.

Read more here:
Cloud Peak Energy Still Generating Cash In A Tough Market

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