Coal Stocks Show Signs of Going Higher
Jun
8
Written by:
6/8/2008 9:04 PM
Coal Stocks Show Signs of Going Higher
In a tough tape on Friday Coal
related stocks performed above average and look to continue to run with
profitable expectations growing. Massey Energy (MEE), Alpha Natural Resources (ANR)
and Arch Coal (ACI) all have rising earnings expectations and are at 52 week
highs. Just this past Monday, a broker, David Khani from FBR Capital Markets
raised his price guidance for coal for next couple of years.
Massey Energy had a 1.48% increase
on Friday when the S&P 500 fell 3%. This heavily covered producer of coal
has had their current year earnings estimates increased for the current quarter
from 0.50 to 0.76 in the past 90 days. The 13 analysts that cover the stock
have also raised the yearly earnings estimates. The yearly earnings estimates
have risen from 1.96 to 2.97 in the same 90 day period. Revenue is expected to
increase 16% in the current quarter and 23.6% in the next quarter.
Alpha Natural Resources has some
outstanding earnings expectations with earnings expected to grow 205% in the
current quarter and 335% in the next quarter. With revenue growth of 20% in the
current quarter, ANR has risen 370% over the past year but should continue to
move higher with only a 12.08 forward P/E and very respectable earnings
potential.
Arch Coal performed the best on
Friday with a 3% move to the upside. This 10 Billion market cap St Louis based coal
producer is expected to see its earnings increase year-over-year 146% when it
announces its current quarter. This stock has the most reasonable trailing
Price/Earnings ratio of the three stocks mentioned here at 46.22. With 23% revenue
growth expected in the current and the next quarter, ACI should continue to
rally.
It’s a tough market but a number of
coal producers have rallied and should continue to rally despite the difficult
environment due to good earnings and revenue growth.