Commodities & Metals

Coal Stocks Stumble Again (JRCC, PCX, CNX, ANR, ACI, WLT, BTU)

US coal stocks are getting pummeled again today, with James River Coal Co. (NASDAQ: JRCC) and Patriot Coal Corp. (NYSE: PCX) leading the downturn. Downgrades to Patriot Coal from UBS and CRT Capital Group started the slide as UBS cut the company’s target price from $5.50 to $2.50 and CRT Capital cut its rating to “fair value” noting the company’s uncertain refinancing status and its poor outlook for positive cash flow.

Other coal miners with operations in the Appalachians are also getting hit. Consol Energy Corp. (NYSE: CNX), Alpha Natural Resources Inc. (NYSE: ANR), Arch Coal Inc. (NYSE: ACI), and Walter Energy Inc. (NYSE: WLT) are also down as much as -5%. Even Peabody Energy Corp. (NYSE: BTU), which has most of its operations in the Illinois and Powder River basins, can’t escape the sell-off.

James River, like Patriot, holds considerably more debt than it holds equity making any need for additional borrowing an expensive proposition. As of May 15th, both stocks had more than 50% of shares held in short interest, making short covering a positive price mover. With natural gas prices falling again (down to $2.46/thousand cubic feet today), demand for coal is not likely to grow again any time soon.

James River’s shares are off -12% at $2.62 after posting a new 52-week low of $2.61 earlier. The prior range was $2.90-$22.33. Patriot Coal is off more than -10% at $2.33 in a 52-week range of $1.36-$24.99.

Alpha is down -6.6% at $10.78 after posting a new 52-week low of $10.77 earlier today. The prior range was $10.81-$55.20. Arch Coal is down -5% at $6.94 in a 52-week range of $6.77-$29.99.

Consol Energy is down -3.4% at $29.10 after posting a new 52-week low of $28.97. The prior range was $29.02-$55.02. Walter Energy is down -4.8% at $48.92 in a 52-week range of $47.42-$132.38 and Peabody is down -5.4% at $23.86 in a 52-week range of $22.85-$61.98.

Paul Ausick