Cramer's 'Mad Money' Recap: Ole King Coal
By TheStreet.com Staff
8/25/2005 7:04 PM EDT
thestreet.com
Coal Callin'
"Coal is hot, getting hotter. I need you in Peabody (BTU:NYSE - commentary - research - Cramer's Take) coal," said Jim Cramer Thursday on his "Mad Money" TV show.
Cramer is a fan of coal because as the prices of natural gas and oil increase, coal, a cheaper alternative for electricity production, takes market share.
Most coal stocks, however, are not good investments because they either have primarily high-sulfur coal, have sold too much future coal production at current prices, which won't allow them to profit as much as the price of coal increases, or they don't have large enough reserves.
However, Peabody has 50 years' worth of proven coal reserves, much of which isn't locked in at current prices, said Cramer. It also has "ultralow" sulfur coal and is a best-of-breed play in the coal sector, Cramer added.
Cramer was bearish on Foundation Coal (FCL:NYSE - commentary - research - Cramer's Take), Consol Energy (CNX:NYSE - commentary - research - Cramer's Take), Arch Coal (ACI:NYSE - commentary - research - Cramer's Take) and Massey Energy (MEE:NYSE - commentary - research - Cramer's Take). Cramer said most of FCL's coal was high sulfur, and it doesn't have very much coal.
Consol also has mostly high-sulfur coal. ACI has low-sulfur coal but can't capture the upside because most it its coal is locked in at current prices. Cramer is also uncomfortable with ACI's debt.
Cramer said Massey was OK, but it wasn't best of breed.
A caller asked for names of companies that supply the coal industry. Cramer mentioned Joy Global (JOYG:Nasdaq - commentary - research - Cramer's Take), Terex (TEX:NYSE - commentary - research - Cramer's Take) and Bucyrus (BUCY:Nasdaq - commentary - research - Cramer's Take) as good plays.
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This is the last time I post any comments from Cramer. His shallow analysis and shoot from the hip opinions aren't worth much, IMO. |
