EnergyPod

Goldman Sach's Upgrade Makes Coal Burn Brighter

Agree. Coal stocks are good places to be in the foreseeable future. Here's some excerpt of an analysis on Alpha Natural Resources (ANR) that I thought was interesting. Can't find the link.

************* begin excerpt on ANR **************
28 total tons is my total est 2009 based on q4 07 production of 7.5 mil tons

We know for sure that 5 mil steam coal and 3.5 of met are priced at $70 and $100 for 2009
My calculations assume that the remaining 2/3 of production will be priced at:
$100 for steam coal
$175 for met coal

From ANR company presentation on their website.. cost of sales have been consistently just under $50 a ton for several years... my calcs assume a 10% rise in costs to $54 a ton

5 x 70 + 3.5 x 100 + 11 x 90 + 8.5 x 175 = 350 + 350 + 990 + 1500 = 3.2 billion


3.2 bill / 28 mil tons = $114 average sales price per ton..

Costs at roughly $54/ton.. $60 margin per ton (Im assuming a 10% increase in costs based on CEO expectations)

$60 profit per ton x 28 million tons = 1.68 billion in net income

1.68 billion over 65 million = $25.85 earnings per share minus 33% taxes yield $17.32 eps

$17.32 per share x PE 10 = $173 share price by mid 2009 or so

************* end of excerpt on ANR **************