Walter Industries Makes the Most of the Coal Mines - Barron's

Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:

Deeply in the Black by Christopher C. Williams

Summary: Production problems caused a tumble in the shares of small coal producer Walter (WLT), falling 30% since last April to a recent $25. Those problems have since been fixed, and the company is expected to produce up to seven million tons of coal in 2007, lifting profits to $3.06 a share. Strong demand for Walter's main product, metallurgical coal, which sells for twice the price of regular coal, has analysts suggesting that earnings could rise 15% in the next five years. The company is meeting the demand with expanded capacity and has up to 20 years of reserves of the pricey product. Bulls also believe that a spinoff of Walter's home building and financing operations, profitable though they are, could help the company realize even greater value. Bottom Line: "The company's assets could be worth as much as 38 a share, 52% above its current stock price."
Related Links: Why I'm Not Dipping Into Walter Industries • Why I Bought Walter Industries

WLT 1-yr chart

Comments

[tblakeslee:]

I am shorting coal as the Democrats have sworn to pass cap and trade legislation by the 4th of July. This will eliminate the cost advantage of coal.
www.ucsusa.org/assets/...
There is also a move to get tough on mercury emissions as they may be responsible for the frightening increase in Autism.
www.ncbi.nlm.nih.gov/e...;cmd=Retrieve&...
According to the EPA 1 in 6 women of childbearing age have dangerous levels of mercury

2007 Apr 01 10:32 AM