Out Fox The $treet

The new proposed rules by the Environmental Protection Agency, or EPA, have far reaching impacts on coal used by power plants to produce electricity. It doesn't, however, impact coal used for steel and especially that exported to foreign locations. Based on this news, the large 10% decline by Walter Energy ( NYSE: WLT     ) is perplexing considering the coal miner is almost completely focused on the metallurgical export market. With the recently released first-quarter results, the company has plenty of issues outside the EPA. From a China slowdown to an oversupplied metallurgical coal market, the company has plunged to new low after new low. Ironically, the ruling has a greater impact on  Peabody Energy ( NYSE: BTU     ) and the majority of stocks in the Market Vectors Coal ETF , which ended up virtually flat the day of the ruling. The reaction is very suggestive of a market overly negative on Walter Energy and fellow met coal leader Alpha Nat...

After another weak earnings report, it appears that Arch Coal ( NYSE: ACI     ) may never regain momentum. The coal miner can't seem to catch a break with domestic thermal coal demand improving, but the high dollar metallurgical coal market plunging to new lows. Arch Coal remains one of the largest domestic coal producers with a target of selling at least 130 million tons during 2014. Unfortunately, a rebound in one segment is being met by a loss in another segment. The company is suffering substantial losses, bringing up doubts of whether a strong enough rebound will occur. Read the full article here . Disclosure: Long ANR. Please review the disclaimer page for more details. 

With Bank of America issuing a negative report on metallurgical coal, Walter Energy ( NYSE: WLT     ) slumped 20% on the news. The analyst was also bearish on other met coal producers including Alpha Natural Resources ( NYSE: ANR     ) and Arch Coal ( NYSE: ACI     ) . Typically a beaten down stock would grab some interest in the market, but in the case of Walter Energy, recent debt financings and weak prices for met coal make it questionable whether the stock will rebound. Walter Energy is the largest pure play, met coal miner in North America with operations primarily in Alabama and Canada. The stock was a poster child for the booming commodity sector back in 2011 when it soared to over $140 on relentless demand from China. Now, the stock has a prominent firm placing a $2 target on the stock. Read the full article here . Disclosure: Long ANR. Please review the disclaimer page for more details. 

After weak met coal guidance from Alpha Natural Resources ( NYSE: ANR     ) and Arch Coal ( NYSE: ACI     ) , Walter Energy ( NYSE: WLT     ) surprised the market with bullish commentary on the coal needed for steel production. Walter Energy is the largest pure-play met coal miner trading on the domestic stock exchanges. After closing another thermal coal mine, the company expects to only produce 300,000 tons of thermal coal this year, leaving the sole thrust on met coal. Other domestic coal miners produce met coal along with sizable amounts of thermal coal used for electricity production. Read the full article here . Disclosure: Please review the disclaimer page for more details. 

Though the stocks haven’t traded well the last couple of days, costs cuts have improved the potential for rebounds in both Peabody Energy (NYSE: BTU ) and Walter Energy (NYSE: WLT ) . Peabody easily smashed estimates while Walter provided hope that a liquidity crisis wouldn’t smash the stock. Coal stocks trade at multi-year lows as falling commodity prices have hit revenues, but now the companies have been able to drastically more » Disclosure: Long ANR. Please read the full disclaimer page for more details. 

A typical headline such as the above usually signals a stock that has an absurdly high valuation and that is due for a correction. In the case of Walter Energy (NYSE: WLT ) , the amazing part is how low the market cap has dropped. This stock was a poster child of the commodity boom and has collapsed around 90% in just over two years. The company is seen as the “pure more » Disclosure: Long ANR. 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...

After the market close on Wednesday, Walter Energy (WLT) reported earnings that beat estimates. The earnings this quarter were important considering the rapid decline of the stock over the last couple of months. The company is a leading "pure-play" producer of metallurgical coal for the global steel industry with operations primarily in the U.S. and Canada. The company reported a solid $0.43 from continuing operations compared to the $0.36 expected by analysts. Although production was up year-over-year, lower prices hurt earnings causing them to drop from last years $1.83. Read the full article at Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page fore more details. 

May was one of the worst months on record for the major averages with a decline of more than 6% for the Russell 1000. Not only was the decline severe for the major averages, but numerous individual stocks in the index dropped more than 25%. In fact MEMC Electronic (WFR) and Green Mountain Coffee (GMCR) were crushed over 50%. The key now is to determine if these drops were justified or if the sell off presents a buying opportunity. Bespoke Investments prepared the below list of the worst performing Russell 1000 stocks in May. Read the full article at Seeking Alpha. Disclosure: Long ANR. Please read the disclaimer page for more details. 

According to this Reuters report on CNBC, iron ore demand is set to grow at 11% through 2017. Wait, didn't stocks initially plunge today due to fears of slower demand in China for iron ore? Talk about a confusing market with conflicting currents in the news. The actual news from BHP Billiton (BHP) today was that demand from China was "flattening" or otherwise growing in the mid single digits versus the double digit growth of the past decade. Slower growth, but still growth. How this is news was beyond me. Everybody should know by now that China wants slower growth. Stocks like Alpha Natural Resources (ANR) are down some 75% since early 2011 peaks. The market has already harshly punished this met coal producer to the extreme making the initial 6% drop further signs of a bottom. Remember that met coal is used with iron ore to produce steel. So now basically within 24 hours the media is spinning out reports of massive growth in iron ore demand and the expectations f...

Friday was a wild day in the metallurgical (MET) coal sector as Patriot Coal (PCX), Walter Energy (WLT) , and Norfolk Southern (NSC) all made noteworthy announcements. With Patriot Coal and fellow met coal producer Alpha Natural Resources (ANR) both sinking more than 10%, one would assume that all of the announcements were negative. Summary of the announcements from Friday: Before the market opened, Patriot Coal put a major damper on the sector by announcing the closure of several high-cost met coal mines due to slumping demand for seaborne coal. During the day, Norfolk Southern announced the loading of the largest volume cargo in the history of Pier 6 at Lamberts Point. After the market closed, Walter Energy announced a reduction in 2012 production due to equipment and facility issues while announcing the market remains robust. (Walter still expects roughly 19% to 34% production growth for the year) Naturally the news for Patriot Coal is disastrous for the company. Yet another...

Tuesday night, China reported October inflation close to expectations at 5.5%. Though the whisper numbers expected something possibly around 5.3% and could cause a minor market sell-off on Wednesday, the news was wildly bullish. Short term the market always trades off estimates. Long term though, the trading is based on the trend. The trend for inflation in China is clearly downward. Inflation in October eased from the 6.1% annual rate in September with food prices declining 0.2% in the month. Read the full article at Seeking Alpha. Disclosure: Long ANR, FCX, CCIH. Please review the disclaimer page for more details.

Walter Energy (WLT) is a leading met coal pure play not only in the US but in the world. The stock is up nearly 30% this morning on news of a potential bid from Anglo American at $120 share. While yesterdays closing price of $75 does make a $120 bid appear attractive one needs to step back and realize that the stock traded over $130 as recent as the end of July. Not many long term investors would be willing to take such a low price. This stock along with our favorite met stock, Alpha Natural Resources (ANR), and the sector have just been crushed with the fear of a global recession. Ironically the main growth drivers of China and India don't appear to be weakening much at all. The assets of ANR and WLT remain just as attractive as it did back in July. WLT has a 52 week high of $143.76 and I'd expect any accepted offer to exceed that price. ANR appears more attractive with a much larger met coal reserve base. The stock also remains over 50% below its 52 week high of $68.0...

In January, Alpha Natural Resources ( ANR ) soared to a 52-week high around $68. Since then the stock has cratered some 30%. During that time frame, ANR snatched up Massey Energy ( MEE ) and now controls the largest domestic metallurgical reserves, enough to become the third largest in the world. (See  The New Met Coal Powerhouse .) So why has the stock been hammered from those January highs to the lows today around $46? Difficult to tell in this fickle market. The deal with MEE closed recently and the stock has just plunged during June. Maybe a bunch of MEE holders have dumped the stock upon the conversion to ANR shares. If so, this is the ultimate buying opportunity. Read the full article at Seeking Alpha .  Disclosure: Long ANR in client and personal accounts. Please review the disclaimer page for more details. 

Rumors that began circulating prior to the close on Friday were finally confirmed Saturday afternoon that Alpha Natural Resources (ANR) had an agreement to purchase Massey Energy (MEE) for $69.33 a share based on Fridays closing price for ANR. This deal comes as little surprise to anybody in the market following the turbulent 2010 MEE faced after the Upper Big Branch explosion back in April. Then more recently, the company placed itself on the auction block after its long time CEO departed and ANR has been speculated as the top candidate for a merger. The combined companies will become the 3rd largest metallurgical (met) coal miner in the world. Met coal is the coal needed by China and other BRIC nations to produce steel for the massive infrastructure projects they all have under way...... See complete article at Seeking Alpha .