Zacks Analyst Interview Highlights: Arch Coal, Peabody, Consol and Natural Resource Partners

Zacks.com releases the latest Analyst Interview. Todays interview is with senior analyst Matthew Thurmond, who discusses Arch Coal (NYSE: ACI), Peabody (NYSE: BTU), Consol (NYSE: CNX) and Natural Resource Partners (NYSE: NRP).

A synopsis of todays Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

How have your coal miners handled the oversupply thus far?

They have been able to dodge near-term price volatility because they sign long-term contracts with utilities. The major coal miners I cover are Arch (NYSE: ACI), Peabody (NYSE: BTU) and Consol (NYSE: CNX). They were all able to report fairly stable pricing during the fourth quarter. However, due to the recent over-supply, every one of them has decided to scale back 2007 production plans.

Arch dropped its guidance from 140 million tons to just over 130 million, and Consol is refusing to increase production unless the market clearly demands it. Peabody, the worlds largest coal miner, is putting off its massive School Creek mine build-out until at least 2009. So overall, my coverage base is able to keep pricing and margins stable by curbing their production levels.

Any tips for investors on how to profit from the coal sector going forward?

I would say sit back and wait for better prices. If the economy turns sour and we happen to have a mild summer in the midst of it, it would probably be a good time to snap up a coal miner like Peabody. Right now, however, I only have one Buy rating on the six coal-focused companies in my coverage universe. This company, Natural Resource Partners (NYSE: NRP), has fairly good dividend growth prospects and trades at a reasonable valuation. It is an MLP, however, and investors need to consider their tax situation before investing.

As for the rest of my companies, the coal miners especially, I think they are fully priced. Companies like Arch and Peabody seem to be getting a premium for potential coal-to-liquids and coal gasification technology. While this could be a huge tailwind for the firms, I dont see it being a serious contributor anytime soon. Further, coal mining is a tough, fairly low-return commodity business. Pricing is difficult to predict, it is capital intensive, and oversupply by marginal producers is a constant worry. So to sum it up, wait for better prices to snap up the countrys major coal miners. If you are looking for a 5-6% yield and agree that coal has a strong long-term outlook, consider Natural Resource Partners.

Read the full interview at http://at.zacks.com/?id=2647.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2679.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros by going to http://at.zacks.com/?id=2648.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

(a)The Zacks Performance Rank performance is the total return of equal weighted simulated portfolios consisting of those stocks with the indicated Zacks Rank net of fees. Results reflect the reinvestment of dividends and other earnings. Simulated results do not represent actual trading and may not reflect the impact that economic and market factors might have had on decision-making if an adviser were actually managing a client's money.

(b)The S&P 500 Index ("S&P 500") is a well-known, unmanaged index of the prices of 500 large-company common stocks selected by Standard & Poor's. The S&P 500 includes the reinvestment of all dividends, no transaction costs, and represents the gross returns before management fees.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here