Coal Stocks Fail to Break Out Despite Bullish Calls

Optimistic coal calls have been pouring in since October, but the segment has failed to break out.

Back in October Barron’s gave coal stocks a lift when it noted that global coal usage is projected to increase by 55% by 2025. Later in the same month, Bloomberg reported that Chinese coal imports tripled year-over-year from August to September, but a brief dollar rebound was weighing on commodity stocks. The dollar has since resumed its slide against global currencies, and according to The Wall Street Journal, China’s government is looking to overhaul its coal sector out of fear of an undersupply this winter.

Despite what seems to be a consistent inflow of good news and optimism for the sector, the Coal Stocks Index has failed to make a strong move higher.

Over the last three months the coal sector has been mixed with a bias to the upside, and a look at the Index’s performance chart compared to the S&P 500 shows that it has largely tracked the broad market. While Yanzhou Coal Mining (YZC), Penn Virginia Resource Partners (PVR), and Massey Energy (MEE) have added more than 20% gains for the period, National Coal (NCOC) and Evergreen Energy (EEE) have plummeted by more than -30%.

Alpha Natural Resources (ANR), which hangs in the middle of the pack for the last three months has been subject to significant volatility for the period. The stock received two analyst upgrades in December, but it is trading near strong technical resistance at around the $42 mark.

With select stocks, like Patriot Coal (PCX) and Walter Energy (WLT) trading more than 400% above their 52-week lows, some traders might think the sector is out of steam. However, firms like James River Coal (NADSAQ: JRCC) and International Coal (ICO) remain -30% from highs.

Based on current valuations, the Coal Stocks Index is one of top-50 tickerspy Indexes ranked by yield, with an average annual dividend payment yielding 1.9%.

Investors can track the Coal Stocks Index for performance trends and a suite of other metrics at tickerspy.com.

Tags: ANR, EEE, ICO, JRCC, MEE, NCOC, PCX, PVR, WLT, YZC