Nov. 6, 2014, 3:35 PM
- “The fundamental case for coal is strengthening but requires several years of patience," and coal miners (NYSEARCA:KOL) still pose too much short-term risk for investors, J.P. Morgan analyst John Bridges says.
- The coal sector is "very much a weather trade" which is sensitive to this winter’s temperatures, Bridges says, "consequently, without another particularly cold winter or a direct cyclonic hit on Australia’s coking coal mines, coal prices and thus the coal equities are likely to remain volatile through the 2014-15 winter."
- In the sector, Bridges recommends Consol Energy (CNX +0.6%), Alliance Resource Partners (ARLP -0.4%) and Foresight Energy (FELP +1.7%), as only high-yielding coal MLPs are resonating with investors.
- Most big coal names are adding to yesterday's gains, as the IEA predicts world coal demand to grow 2.3% in 2015, mostly undaunted by stricter clean air regulations and competition from cheap natural gas: ANR +5.1%, ACI +4.7%, BTU +0.5%, WLT -1.1%, CLD +0.9%.
Nov. 5, 2014, 12:24 PM
- Coal stocks (NYSEARCA:KOL) are rallying in the hope that the new balance of power in D.C. can at least halt what the companies view as an attack on their livelihood.
- Strategas' Daniel Clifton thinks there’s a good chance the new Congress will “slow down EPA rules on coal” which have limited its use by utilities, and any approval for the Keystone XL pipeline would mean more rail transport for coal, a problem Peabody Energy (BTU +4.4%) has said was limiting its coal sales.
- ANR +5.8%, CNX +3%, WLT +6.3%, CLD +4.5%, ACI -0.2%.
Nov. 5, 2014, 9:16 AM
- Gainers: CRTO +19%. JIVE +17%. YOD +16%. TTPH +12%. IBIO +11%. AEZS +9%. EXEL +8%. CLNY +7%. ANR +7%. ROYT +7%. EOG +6%. PHMD +6%. NICE +6%. VPCO +6%. ATVI +5%. VG +5%. CTSH +5%. WLT +5%. MACK +5%.
- Losers: CHUY -24%. NUS -22%. FEYE -16%. ZU -14%. TRIP -13%. SSYS -8%. MEMP -7%. NG -6%. ANV -6%. ARIA -6%. AWAY -6%.
Oct. 30, 2014, 5:49 PM
- Despite posting a lighter than expected Q3 loss, Alpha Natural Resources (NYSE:ANR) plunged in afternoon trading after it said more production cuts are likely because the market is still oversupplied.
- "The global seaborne metallurgical coal market has shown no meaningful improvement over the last several months," ANR said, expecting more production cuts "as current prices do not allow a return for many of the global producers."
- ANR gloomy outlook for the coal markets (NYSEARCA:KOL) contrasts with that of some competitors including Peabody Energy (NYSE:BTU), which said last week that the industry may be poised to rebound from its worst downturn in decades.
Oct. 30, 2014, 8:12 AM
Oct. 29, 2014, 5:30 PM
- ABC, ABMD, ACIW, ACOR, ALLE, ALU, AMAG, AMT, ANR, APD, APO, ATK, AUDC, AVP, BCO, BG, BGCP, BLL, BWA, CAH, CARB, CBM, CEVA, CI, CME, CNSL, COP, COR, CRCM, CRNT, CRR, CVI, CVRR, DBD, DFT, DHX, DST, EPD, EXLS, FCH, FCN, FIG, FIS, GBX, GEL, GG, GLOP, GNC, GOV, GTI, GTLS, HAR, HEES, HGG, HST, I, IDA, IDCC, INCY, INGR, IQNT, IRDM, IRM, ITC, IVZ, JCI, K, KCG, KEM, KMT, LAD, LECO, LKQ, LLL, LPLA, LRN, MA, MD, MDC, MDXG, MGM, MMYT, MO, MOD, MOS, MPC, MPLX, MPW, MSCI, MZOR, NEO, NGD, NI, NILE, NOV, NVO, NYT, O, OAK, OCN, ODFL, OXF, PBI, PCRX, PEG, Q, RDEN, RDN, RDS.A, RFP, RGLD, RTIX, SCG, SHOO, SMP, SNAK, SPAR, SSE, STRA, STRZA, SUI, TASR, TEVA, THRM, TRI, TWC, UAN, UPL, USAC, VICL, VNTV, WLT, WST, WWE, XEL
Oct. 28, 2014, 12:27 PM
- The anticipated short squeeze is on after Cliffs Natural Resources (CLF +16.9%) beat Q3 earnings expectations,
- Stifel analysts think CLF is making progres but worry about its Bloom Lake project; CLF was able to show better than expected cost controls across all reported segments in Q3, but a concern is the rail take-or-pay contract which would require even bigger cash payouts in 2015 if Phase 1 at Bloom Lake is shutdown.
- Other coal producers are posting sharp gains today: ANR +4.9%, BTU +3.2%, WLT +8.3%, ACI +8.4%, CNX +4.1%, CLD +5.3%, WLB +4.8%.
Oct. 17, 2014, 12:52 PM
Oct. 15, 2014, 3:34 PM
- Peabody Energy (BTU +1.2%) has held up a bit better than most other coal stocks lately, but that does not stop Imperial Capital from assigning an Underperform rating and $5 price target to the stock.
- While BTU enjoys a stellar reputation and strong management team, the firm sees its shares and senior notes remaining under pressure from rising leverage and instability in global coal markets.
- Like more distressed coal producers, BTU's troubles stem from the debt-financed acquisition of coking coal assets in 2011 when it issued $4B of debt to purchase Macarthur Coal, Imperial adds.
- Most coal names are enjoying a nice bounce today: ANR +9.3%, ACI +8.3%, WLT +8%, CNX +3.8%, CLD +0.1%, YZC -0.8%, WLB -3%.
Oct. 14, 2014, 12:44 PM
Oct. 13, 2014, 12:56 PM
- Arch Coal (ACI -2.6%) turns sharply negative, losing all earlier gains from this morning's report that Q3 adjusted EBITDA should come in at $70M-$74M, easily above the $67M consensus.
- Citigroup’s Brian Yu writes that ACI’s liquidity progress likely is due to improved working capital management, but that “the EBITDA improvement is still not enough to cover reported interest expense that averages $95M per quarter.”
- FBR Capital is more upbeat, reiterating its Outperform rating and saying the balance sheet update is a positive given investor concerns surrounding ACI’s liquidity in recent months.
- Coal stocks are now mixed: BTU +1.5%, ANR -0.6%, WLT -1.3%, CNX +0.3%, CLD -0.5%, WLB -2.9%.
Oct. 13, 2014, 9:41 AM
- Arch Coal (ACI +4%) pops higher at the open after saying it expects to record Q3 adjusted EBITDA of $70M-$74M vs. analyst consensus estimate of ~$67M.
- ACI says it held $1.05B in cash and short-term investments as of Sept. 30, vs. ~$990M at June 30; available liquidity as of Sept. 30 totaled $1.3B.
- ACI, which reports its full quarterly results on Oct. 28, says it published today’s preliminary earnings because of “recent unprecedented market conditions.”
- Other coal names also open higher: BTU +4.1%, ANR +4.1%, WLT +3.3%, CNX +1.3%, CLD +0.8%, WLB +0.7%.
Oct. 9, 2014, 12:19 PM
- Teck Resources (TCK -7.2%) tumbles to five-year lows after China, the world’s top coal importer, said it will levy tariffs of 3%-6% on imports of coal as of Oct. 15.
- The sudden move reintroduces taxes China had scrapped, and is seen by analysts as an attempt by the government to help its ailing domestic coal production sector.
- TCK's sales of commodities directly into China accounted for more than 26% of overall revenue in 2013, or nearly C$2.5B; it is unclear what portion of TCK’s revenues from China were generated by coal sales, but coal represented 44% of overall revenue in 2013.
- Among other top coal names: ACI -11.7%, CLF -11.5%, BTU -9.2%, WLT -7.2%, ANR -6.4%, CLD -5.5%, CNX -4.8%.
- ETF: KOL
Oct. 8, 2014, 12:24 PM
- Morgan Stanley analysts are the latest to dump on coal stocks (NYSEARCA:KOL), as it lowers its price forecast for hard coking coal to $125/ton next year and says 2015 appears likely to bring a more gradual price recovery than previously expected.
- The firm downgrades Walter Energy (WLT -10.3%) to Equal Weight from Overweight with a $4 price target, down from $16, noting that WLT likely has sufficient liquidity through 2015 but citing the uncertain timing and magnitude of a price recovery as leaving an insufficient margin of safety.
- Peabody Energy (BTU -1.2%) is the firm's preferred play in coal because it is less liquidity constrained than other coal producers; BTU "offers multiple ways to win, with diversified met, domestic thermal and seaborne thermal exposure."
- Also: ACI -6.4%, CLF -5.6%, CLD -5.2%, ANR -3.4%, OXF -2.3%.
Oct. 1, 2014, 5:36 PM
Sep. 29, 2014, 5:53 PM
- Investors should generally stay away from coal stocks such as Arch Coal (NYSE:ACI), Alpha Natural Resources (NYSE:ANR) and Peabody Energy (NYSE:BTU) unless they are very long-term investors, J.P. Morgan’s John Bridges writes.
- Given growing supplies of natural gas and if there's no chilly winter, gas prices could weaken further and create a better buying opportunity for the coal space, the analyst says; coal bulls seem to have been seeing tax loss selling as a better opportunity than hanging on, and deep value buyers are failing to see positive catalysts.
- Bridges sees ACI and ANR as the “terrible twos," as ACI has $4.2B of net debt carried by $470M of market cap while ANR is only half as leveraged; both companies have balance sheet liquidity and have pushed out debt maturities to give themselves time for the coal market to recover, but there's no catalyst on the horizon to provide a boost.
- ETF: KOL
ANR vs. ETF Alternatives
Alpha Natural Resources Inc along with its subsidiaries is engaged in extracting, processing and marketing steam and metallurgical coal from surface and deep mines, and sells it to electric utilities, steel and coke producers, and industrial customers.
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