Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (1203)	3/25/2002 12:58:03 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Time to Mine for Coal Stocks? online.wsj.com Coal lost its luster when the recession hit last year, and Wall Street buried the stocks. But several investment pros see some signs of life, notably more seasonable weather, production cutbacks and an improving economy. Bottom line: long-awaited help for some coal stocks this year. When Barron's Online last visited the industry (see Weekday Trader, "Coal is Cool Again -- For Now," April 17, 2001), we asserted that the meteoric rise in fossil fuel-tied stocks was overdone. Since then, St. Louis, Mo.-based Arch Coal lost a third of its market capitalization, while Massey Energy, a Richmond, Va., spinoff from Fluor Corp., lost nearly half its value. Each has a market cap around $1 billion. Much of the hype had to do with skyrocketing price of clean-burning natural gas, which peaked in late 2000 at $10 per million British Thermal Units (BTUs) before taking a dive, thanks to the recession. Lately, though, prices have climbed to $3.30 per million BTUs. Before the recession took hold, higher energy prices made coal-powered electricity an attractive alternative. At the same time, California's power crunch in the summer of 2000 forced utilities there to tap coal-powered electricity sources. But now, two Wall Street analysts insist the market is ignoring a cut in the industry's production, which Dan Roling, an analyst at Merrill Lynch, predicts will be flat this year. And cutting production as U.S. manufacturers start firing up their plants supports higher coal prices -- and higher earnings. And it wouldn't hurt if we have a hot summer, when electricity demand peaks. "Demand is growing at 3% a year, and we have not built a new coal mine in this country in 10 years," says Roling, of Merrill Lynch, which has banking ties to Arch and where analysts responsible for covering the stock own it. "That is why I am so adamant that demand will exceed supply when the economy improves."