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Coal Stocks Continue to Flounder (WLT) (ACI)

March 15, 2013 2:43 PM EDT Send to a Friend
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Price: $7.91 --0%

Rating Summary:
    4 Buy, 19 Hold, 4 Sell

Rating Trend: = Flat

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Coal stocks are without a doubt struggling. Last year valuations were cut in half and since then related stocks have been spinning their wheels and have been unable to rebound. Abundant supply is the main reason cited for poor performance in the sector. According to analysts at Cown securities, the met coal sector may not see improvement anytime too soon.

"In our view, the global met coal market is an environment lacking near-term catalysts amidst greater economic malaise," said analyst Daniel W. Scott. "Following the 2Q13 settlement, we struggle to identify meaningful short-term positive catalysts on the horizon."

"The Australian rainy season is coming to a close, leaving met coal production relatively unscathed, in comparison to recent years. Economic data from the US, China, and Europe continues to be mixed. Though recent Chinese import and steel production data registered at elevated levels, high inventories and weakening steel prices may pressure met coal pricing."

Walter Energy, Inc. (NYSE: WLT) is Cowen's top pick in th sector, given the firm's long term thesis that favors high-quality, lower-cost producers. The firm also has Buy rating on Alpha Natural Resources (NYSE: ANR) and Arch Coal (NYSE: ACI).

Teck Resources Limited (NYSE: TCK), Peabody Energy Corp. (NYSE: BTU), and James River Coal Co. (Nasdaq: JRCC) are rated Neutral.




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