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...

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. 

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 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. 

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 .