http://www.profit.zacks.com/
CHICAGO--(Business Wire)--
Zacks.com releases the latest Industry Outlook. Today`s interview is with senior
analyst Neil Malkin,who talks about the Coal Industry, including Peabody Coal
(NYSE: BTU), Arch Coal Inc. (NYSE: ACI), Rio Tinto (NYSE: RTP) and Walter Energy
(NYSE: WLT).
A synopsis of today`s Industry Outlook is presented below. The full article can
be read at http://at.zacks.com/?id=2678.
The larger coal players with strong balance sheets will be able to capitalize on
the current market environment in the form of acquisitions. With asset prices
coming down from mid-'08 levels and smaller producers feeling the strain on
margins, this represents opportunities to acquire reserves on the cheap.
In particular, we like companies with exposure to the international coal markets
as well as the Powder River Basin (PRB) in the U.S. Companies like Peabody Coal
(NYSE: BTU) and Arch Coal Inc. (NYSE: ACI) look attractive currently. Both have
recently engaged in long-term growth acquisitions.
Peabody is the largest pure-play coal producer, with significant leverage to the
Australian export market. Due to the high quality of coal produced and its
proximity to Asia (emerging markets) Australian seaborne coal trades at a
premium to all other coals.
Peabody would benefit especially when China and other Asian emerging markets
begin to rebound. The stimulus packages enacted by the federal government during
the recent months should start to pay dividends toward the end of '09.
Arch Coal has a significant amount of reserves and is a top-three producer in
the PRB. In our opinion, PRB coal will be in great demand over the coming years.
The significant coal-fired power plant build-out will increase annual thermal
coal demand by more than 60 MM tons; approximately 50% of this new demand will
be met by PRB supply. Its likely acquisition of Rio Tinto's (NYSE: RTP) Jacobs
Mine will increase ACI's PRB market share while gaining operating synergies.
We also like companies with leverage to metallurgical coal markets. When the
global economy starts to turn around, likely in the beginning of 2010, demand
for steel and metallurgical coal should rise. Companies like Walter Energy
(NYSE: WLT) should fare well in this environment.
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About Zacks
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year-to-date periods are the linked monthly total returns (price changes +
dividends) of equal weighted hypothetical portfolios, consisting of those stocks
with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction
costs. These are not the returns of actual portfolios. The hypothetical
portfolios were created at the beginning of each month from Jan 1988 forward
based on the values of the Zacks Rank available to Zacks' clients before the
beginning of each month.
The portfolios created monthly from 1988 through September 2006 exclude ADRS and
are comprised of stocks that have the indicated Zacks Rank and were covered by
at least two analysts at the time of the stocks inclusion in the portfolio.
Starting in October 2006 and going forward, the portfolios are comprised of all
stocks with the indicated Zacks Rank and do not exclude ADRs, which is more
reflective of the list of stocks that customers will find on the Zacks web
sites. 2007 returns are for the period of Jan 1 - Jun 30, 2007. These
performance numbers have been audited from 1995 through 2003 by Autschuler
Melovan, a division of American Express Financial.
Zacks.com
Mark Vickery
312-265-9380
Visit: www.zacks.com
Copyright Business Wire 2009
