Analyst Optimism Powers Coal Stocks
Coal stocks shot higher on Wednesday after analyst Brean Murray voiced continued optimism for the sector.
Brean Murray is bullish on U.S. coal stocks, citing international demand for metallurgical coal, which is used in the production of steel, and an improving thermal coal outlook. The firm added Patriot Coal (PCX) to its list of coal buys, upgrading the stock from hold, and boosting its price target to $25 – a huge premium to Tuesday’s closing price of less than $16.
As a whole, the Coal Stocks Index is ahead by 1.3% today, with Patriot leading the way, up by 5.5%. After a sharp pullback to start 2010, the Index has now rebounded to outperform the S&P 500 by 2% over the last month.
Brean Murray now has Buy ratings on Patriot, Alpha Natural Resources (ANR), Peabody (BTU), Consol Energy (CNX), James River Coal (JRCC) and Walter Energy (WLT). The firm called Walter its top short-term pick in the coal space, with a $110 price target.
Over the last five sessions, Evergreen Energy (EEE) and L&L Energy (LLEN) have outperformed, followed by International Coal (ICO) and Alliance Holdings (AHGP). Meanwhile, the bulk of the sector remains in negative territory for the period, despite a Bloomberg report that noted Chinese demand shot up six-fold year-over-year in December to 16.4 million metric tons.
As of this writing, the Coal Stocks Index is one of the top-60 performing tickerspy Indexes over the last month, up by 4%. It will be interesting to see whether the sector can continue to advance ahead of the S&P in 2010.
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