The coal group is getting beat down again today on the BMO downgrade. Their Alpha Natural Resources price target was lowered from $18 to $5 (Yahoo). ANR may have intrinsic value of $18 or ANR may have intrinsic value of zero. But not $5.
Why Cliffs Natural Resources and Peabody Energy look like good bets at Barron’s. Meanwhile, Alpha plunged to a new 52 week low. Peabody and Arch are close.
Wilbur Ross Says U.S. Coal Is Facing Years of Headwinds at Bloomberg. He is correct the U.S. coal industry is now in secular decline. Perhaps, however, the U.S. coal industry may be near a cyclical rise in this secular decline based on the U.S. natural gas rig count. Moreover, it’s a world-wide industry which is booming…
“Between 2001 and 2010, U.S. coal consumption fell by 5 percent and domestic carbon dioxide emissions dropped by 1.7 percent. But over that same time period, global coal consumption soared by 47 percent, or the equivalent of 23 million barrels of oil per day. Put another way, over the past decade or so, global coal consumption increased by about the same amount as the growth in oil, natural gas, and nuclear combined.” Manhattan Institute
Declining U.S. coal production is a key component of the bull case, and More private coal companies at risk of bankruptcy, analysts say at Metal Bulletin.