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Arch Coal Inc. Message Board

  • madhuben5 madhuben5 Aug 3, 2011 5:12 PM Flag

    Coal Stocks Crushed Why????????????

    Any hope, or any insight on coal stocks including Arch Coal!

    Despite number of recent BUY recommendations on Arch Coal, it is still going down every day, WHY?


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    • The worry over China.

      China has been priming the pump with low interest rates just like the U.S.

      The over building in the U.S. has also been done in China. Housing and lending in China are a big bubble. Just like here.

      No market is always up. We thought that was the case with housing from 1998 to 2008 and then a crash. Prices for home, real estate in the U.S. have been in a steady decline for three years with no end in sight.

      That throws millions out of work in the construction trades and all suppliers to them.

      Well China has been doing that with construction. Also, they have a banking problem and loan problem similar to ours.

      The overheated Chinese stock market has been falling for the last 12 months. Next is construction. That will cause less imports for a year of copper, coal, iron ore for steel.

      I'm not saying coal is not going to be a big part of China's growth. It's just that coal shares climbed 50%-100% over the last year for many companies.

      This company did a buy out during a frenzy in the coal market. Its shares and earnings are not justified in terms of the other energy stocks: CHK, DVN, BP, XOM and Shell.

      Those companies are growing dividends, cash flow, EPS and the share prices did not run up as much as coal. Coal shares will probably decline throughout this next 12 months as China's growth cools.

      Come back in a year and buy when the share prices have dropped 25%. If you own shares now, consider selling, buying CHK or XOM or DVN. They will appreciate more during the next year than will coal.

      Coal is a China play. The U.S. is going to consume less coal as more and more plants in the U.S., old and new, will use natural gas instead of coal. Think coal is really dirty, the dirtiest energy source there is.

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