Peabody CEO Bullish On Coal, Cramer Likes The Stock (BTU, MT, ACI, ANR, WLT, JRCC, NRP)
Shares of Peabody Energy (BTU), the largest U.S. coal producer, are down fractionally today, but there is still plenty of good news surrounding the Missouri-based company. On Tuesday, Peabody said its second-quarter profit surged 38% and the company raised its full-year profit guidance to $4.20-$4.60 a share from $3.50-$4.50. Peabody Chairman and CEO Greg Boyce appeared on Jim Cramer’s “Mad Money” last night to chat up his company and the coal business.
Comments from Boyce may be helping the Coal Stocks Index to a 0.1% gain. Boyce noted that there are 3.5 billion without adequate access to electricity and only coal can fill that void. Citing booming demand in emerging markets such as China and India, Boyce told Cramer coal use will continue to increase over the next 10-20 years.
Cramer called Peabody a cheap stock and continues to recommend buying the shares. He’s not the only one bullish on Peabody. Brean Murray reiterated a “buy” rating on the stock with an $81 price target, which is well above where the stock currently trades. Dahlman Rose also reiterated a “buy” rating on Peabody.
Critical to Peabody’s growth plans is international expansion and central to that theme is the company’s planned $5.1 billion joint acquisition of Australia’s Macarthur Coal with ArcelorMittal (MT), the world’s largest steelmaker. Peabody tried to acquire Macarthur, the world’s largest maker of pulverized coal last year and was rejected and the purchase may not be any easier this time around. China’s Citic Group, which owns 24% of Macarthur, is reportedly mulling a counterbid for the company, according to Reuters.
Looking at other coal stocks, Arch Coal (ACI) is up 1%, but Alpha Natural Resources (ANR) is down the same amount as is Walter Energy (WLT). James River Coal Company (JRCC) and Natural Resources Partner (NRP) are both higher by 1%.
Investors can track the Coal Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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