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Coal under pressure for the short term!

With the mines closure in china and a pick up in the steel sector, we expect coal stocks to increase in price for the medium term. However, with the recent pressure for a decline in the stock market, and a correction in the dollar index, we might have some pressure to the down side for a while. Another element to consider in the recent up move in natural gas, since coal and Nat gas trade side by side.

As a result we are starting to anticipate a move in the sector for the medium term with Arch coal, INC (ACI). The company has a 12 month trailing P/E of 18.5x, a 12 month trailing EPS of 1.219. ACI pays a dividend of .36 per share a dividend yield of 1.6%. we expect the company to trade around 20 to 30 times within the following 6 months.

Disclosure: LONG, ACI