Seeking Alpha: Peabody Energy Still Waiting For Better Days

Discussions of relative performance always need to anchored with the question of "relative to what?". Peabody Energy (NYSE:BTU) has been one of the best-performing U.S. coal companies year-to-date and over the last year (edged out in both cases by Cloud Peak (NYSE:CLD), and handily beaten by quasi-coal company CONSOL Energy (NYSE:CNX)), but the coal sector has continued to get thumped on weak met coal pricing, long-term concerns about EPA regulations for thermal coal, and rail shipments from the Powder River Basin.

I continue to believe that Peabody Energy is the best-positioned U.S. coal company for the long term. This year may see the company go FCF-negative, but Peabody can generate positive free cash flow at coal prices well below the breakeven levels for Alpha Natural (NYSE:ANR) or Arch Coal (NYSE:ACI). I also like the company's asset base (Illinois and Powder River Basin in the U.S., Australian met coal). While Alpha Natural has more upside if met coal prices suddenly shoot up again, I think Peabody is the better risk-adjusted pick overall.

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Peabody Energy Still Waiting For Better Days

Seeking Alpha: Noble Energy Targeting Multiple Growth Plays

Noble Energy (NBL) has delivered below-average adjusted production growth over the last five years and likely will need to take on additional debt to fund its capex plans over the next couple of years. I believe those negatives are more than offset by a strong future production profile based on multiple strong producing assets that should generate solid returns in the coming years. Noble isn't strikingly cheap, but still offers enough upside to merit a closer look.

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Noble Energy Targeting Multiple Growth Plays

Investopedia: Joy Global's Qualty Not The Issue, But The Mining Capex Recovery Is

To its credit, Joy Global (NYSE:JOY) has done nothing during this cyclical mining equipment decline to shake investor confidence in the quality of the company or its management. Margins have held up surprisingly well, and new product development could help compensate for some of the weakness in the market. What's more, I don't think there's much doubt that coal demand will continue to increase around the world for at least the next decade or two. The question for investors, though, is the timing and magnitude of the upturn in equipment demand and how much of that is already incorporated into the shares.

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http://www.investopedia.com/stock-analysis/053013/joy-globals-quality-not-issue-mining-capex-recovery-joy-cat-ge-cnx-aci.aspx

Investopedia: Will Improving Thermal Coal Markets Boost Arch Coal?

Until very recently, it seemed like thermal coal producers couldn't buy a break. Utility inventories were well above historical averages, prices were barely sufficient to break even, and demand continued to decline (as seen in the traffic numbers for major railroads). That's taken the price of Arch Coal (NYSE:ACI), the country's second-largest coal producer) down more than 90% over the past five years. Now it seems like there are some signs of life in the thermal coal market, but will the recovery be strong enough to meaningfully improve the fundamentals for this struggling coal producer?

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http://www.investopedia.com/stock-analysis/052913/will-improving-thermal-coal-markets-boost-arch-coal-aci-btu-cld-cnx.aspx

Investopedia: Can Alpha Natural Resources Find The Bottom?

It's been a pretty miserable summer for coal companies, as low natural gas prices and sluggish steel production have eviscerated prices for both thermal and metallurgical coal. As a debt-heavy company with major exposure to the very much out-of-favor Appalachia region, Alpha Natural Resources (NYSE:ANR) has seen its stock take an absolute pounding. Although valuation suggests extreme pessimism, investors cannot afford not to consider the risk that conditions could get even worse.

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Seeking Alpha: Peabody Energy Still In Limbo; How Low Can It Go?

The investment thesis on Peabody Energy (BTU) continues to be that it's the best house on a pretty scary street - a street that increasingly looking like Elm Street for long-suffering investors. If there's good news in the company's second quarter results, it's that the Street seems to still be washing out expectations despite some signs of improvement in the U.S. coal business. While this remains an interesting asset-driven company for the long term, the coal sector has shown in spades that the answer to the question of how much worse things can get is "a lot worse".

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Peabody Energy Still In Limbo; How Low Can It Go?

Seeking Alpha: Arch Coal Has To Bottom Out Eventually

The most dangerous words in commodity investing are "it can't get any worse". Nevertheless, it's hard to investigate the current conditions and valuation at Arch Coal (ACI) and come away thinking that there isn't some long-term potential here in the shares. Potential is a dangerous word, though, and nobody should consider these shares today who can't stomach the thought of another leg down before stabilization.

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Arch Coal Has To Bottom Out Eventually

Investopedia: Cloud Peak Energy - The Power In Powder

Although 2011 was not an especially strong year for any industrial commodity, it was a pretty lousy year for coal. Export volume stayed pretty high, but momentum was sapped by weakness in met coal and a general cooling-off of what was probably far too much investor enthusiasm to start with. As is almost always the case, it wasn't different this time.

That being said, investors may yet want to bone up on Cloud Peak Energy (NYSE:CLD). As a pure play on the closest thing to clean coal, Cloud Peak could see stronger demand in both domestic and export markets, as well perhaps as interest from larger buyers. (For more, see Earning Forecasts: A Primer.)

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Investopedia: Arch Coal - Some Risks, But More Value

The only way to consistently make money in commodities is to swim against the current. When times are flush and everyone is talking about how the world has changed, look to sell. When times are awful and commentary suggests that the world is changing (against the commodity in question), think of buying. Although, Arch Coal (NYSE: ACI) has some legitimate operating challenges and the Environmental Protection Agency (EPA) issues could lead to a stagnant domestic market, this looks like the right time to think about buying good coal producers. (For additional reading, check out: How To Invest In Commodities. )

A Tough Third Quarter
If there was anything good about Arch Coal's third quarter, it was that management had told the Street not to expect much. So, it was a tough quarter, but not all that surprising.


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http://stocks.investopedia.com/stock-analysis/2011/Arch-Coal---Some-Risks-But-More-Value-ACI-BTU-JRCC-PVR-CNX-CLD-UNP1101.aspx

Ode to Joy Global

It is practically an investing meme now that investors should focus on the "pick and shovel" plays for major investment themes. I suppose you can take that advice very literally in the case of Joy Global (Nasdaq:JOYG), as this leading mining equipment company is very much a pick and shovel play on ongoing theme of global commodity exploitation.


The Quarter That WasAlthough Joy Global did not have a superb quarter at first glance, the context is important. Revenue was down 3% and operating income was down about 4%, but those results were significantly better than analysts expected. With equipment orders up about 43%, the backlog up by double-digits since the beginning of the year and a second straight quarter of a book-to-bill ratio above 1, there was no shortage of reasons to be pleased with the company's quarter.


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