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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 (NYSE: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 IndustriesWhy I Bought Walter Industries


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