Out Fox The $treet

The recent Supreme Court ruling gives coal miners some hope of reduced regulations on the industry. The news arrived too late for the coal industry, as investments have already been made to replace coal power plants. Until Peabody Energy turns around the negative EPS trend, investors should avoid the stock. Coal stocks remain in an absolute crash mode with a limited number trading above $1. The sector rallied on Monday due to a Supreme Court ruling that knocked down a hurtful rule for coal enacted by the Environmental Protection Agency in 2011. Coal stocks rallied on the news, but it isn't clear whether the overturning of the EPA air pollution rule will have any impact on the market considering the late date of the overturning. The power plant market has already shifted toward cheap natural gas, but if any stock has the potential to benefit from a Supreme Court decision, it would be Peabody Energy (NYSE: BTU ) . Looking at the chart below...

Though the coal sector continues to struggle due to plunging prices, the news isn't all bad for the sector. In fact, the confluence of information from Peabody Energy ( NYSE: BTU     ) suggests that a turn is all but certain. For domestic coal investors, Peabody Energy provides the best insight into the global commodity with mines in both the U.S. and Australia along with customers on six different continents. The industry news is consistent with the information doled out by Arch Coal ( NYSE: ACI     ) a few days ago. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After reading the quarterly report for Peabody Energy ( BTU ), one has to wonder if the coal supercycle is back. A few years back the CEO proclaimed that coal had begun a long-term surge in demand yet the stock began a major slump as new mines and higher costs caused profits to plummet. As US investors remain focused on last year's domestic switch to natural gas from thermal coal, the global demand for coal remains as strong as ever. One major theme highlights the global demand picture for coal. Where alternative fuel prices are cheap, consumers prefer that source whether natural gas, nuclear, or alternative fuels. In the cases where alternatives don't exist or are no longer deemed appealing, coal demand is set to grow dramatically. The situation in the US is incorrectly framed as a preference for a cleaner alternative to coal, but the scenario might see a dramatic shift as natural gas prices soar in 2013. Read the full article at Seeking Alpha. Disclosu...

The CEO of Peabody Energy (BTU) is famous for proclaiming the Super Cycle in coal. A funny thing happened on the way to realizing this proclamation. The company produces and sells thermal and metallurgical coal to customers in more than 25 countries on six continents. Market data still shows healthy demand for coal in Asian countries that continue to build coal-fired power plants. Unfortunately for coal producers, a chain of events from slowing growth in China to the advances in production of natural gas in the U.S. has slowed down the short-term demand for coal. Read the full article at Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

With the nuclear crisis in Japan, it's become very clear that coal will remain the King fuel of the developed world and maybe even the emerging world as even China delays its nuclear program. Considering the Opportunistic portfolios managed by Stone Fox has a heavy does of coal investments this is good news. Even if the reason for the gain is because of such a horrible tragedy. Sadly, though nuclear has many benefits it can be a very unstable fuel option. Sure coal has likely killed more people especially in the underground mining and even via the pollution caused by the burning of the material, but it never causes mass panic of a major catastrophe. With coal, the only people that really face daily danger are the miners. People supposedly paid for taking that risk and fulling understanding the danger whether they can find other employment or if that is the only option in the area. With radiation though, whole cities can be destroyed and even though a major catastrophe hasn't ...

With all the focus on BP, everybody has forgotten the damage done to the stock of Massey Energy (MEE) after the explosion at the Upper Big Branch Mine (UBB) in early April. MEE might be thankful for the attention focused on BP, but the stock price hasn't come close to recovering. All mining stocks are down over the last couple months so its not as though MEE has been harshly punished just for the explosion but it is down significantly more then industry leader Peabody Energy (BTU). The difference between MEE and BP and what interests us in the stock is that they've made several brilliant moves even in the face of the tragedy. MEE is working to enhance shareholder value while BP hopes to keep shareholder value from completely collapsing. While the CEO of BP can't seem to catch a break, the CEO of MEE has made numerous moves that benefit his company. The damage to MEE seems to be in the past and recently they've done a decent job showing that the government is possibly re...

Coal companies were hit hard intraday becuase of supposed weak coal import data from China. Guess the data was negative or positive depending on how one viewed it. On one hand the imports were down 11% from September. On the other hand they were up 220% over last year. Apparently the market was looking for a number similar to Septembers. Regardless the YOY gains are enormous and the month to month numbers are bound to fluctuate. The trend still appears for bullish for longs. Companies that we like such as Alpha Natural Resources (ANR) and the new IPO Cloud Peak Energy (CLD) were all hit hard today especially in comparison to the strong gains in the market. ANR was down 5% from its high around the opening bell. U.S. coal mining shares fell on Monday after data showed China's coal imports dropped 11 percent in the last month, even though exporters expect a booming market in the Pacific region for the next few years. Indeed, the latest official Chinese customs data showed coal impo...

The Cloud Peak Energy IPO (CLD) priced last night at $15 which was below the original range of $16-18. Very perplexing considering the commodities sector and especially coal stocks have been very hot of late. Then Reuters published some analyst comments that made us more bullish. Basically the analysts are concerned that the proceeds are going back to Rio Tinto (RTP) and that the deal was overpriced and coal demand is uncertain. Huh? Are they serious? Why has Peabody Energy (BTU) and Massey Energy (MEE) rallied so hard lately? This really seems like Wall St playing games with a forced seller. RTP needs the money to reduce it's debt load. CLD is clearly not overvalued as both BTU and MEE sport PEs in the 20s while CLD starts in the 7-8 range. If anything CLD is extremely undervalued. Gillette, Wyoming-based Cloud Peak raised about $459 million but almost all of the proceeds will go to Rio Tinto, which will retain a 48.3 percent stake in Cloud Peak. Rio Tinto is saddled with debt st...