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James River Coal Şirketi Message Board

  • tellurium_001 tellurium_001 Apr 21, 2008 11:27 AM Flag

    JRCC Is On Fire. Who Is Next?


    If you look at track record, nothing could be worse than JRCC, a coal mining company I bought at $4 a few months ago but sold too soon near $8. I considered a target of $40 in 3 years but expected a correction at the time I sold it. The correction did come one day after I sold, and went down to almost $4.75, where I hoped for to pick up again. But the opportunity was lost and today I still don't have any JRCC.

    A great lesson why one must hold through corrections and do not sell.

    JRCC's track record could not have been worse. Bankrupted a few years ago (2004?), extreme heavy debt load. Horrific quarterly loss after quarterly loss (loss of approaching $1 per share per quarter!!!) Give a few more quarters and the shareholder equity could be wiped out totally. June 30, 2007 the company has less than 400 grands cash in hands. Can you find anything worse that that?

    But bingo coal rallied in the last few months and every one suddenly realzied that JRCC could turn a very handsome profit very soon. And the stock rallied. The lesson is when a company turn from quarterly loss to expected quarterly profit, the stock will appreciate fastest. BTW JRCC hasn't reported Q1, 2008 yet, and Q4,2007 was again a heavy loss.

    PAL is right in such a junction, going from quarterly loss to a very handsome quarterly profit in Q1,2008. I don't know how many people realize that? Or most people are just "wait and see" the Q1 result?

    Comparing with JRCC PAL is in a way much better shape: Virtually no debt. Very positive cash flow. Plenty of cash liquidity in hands. Completely inelastic supply/demand dynamics of the PGM market, comparing with coal which is quite elastic. The only reason PAL hasn't rallied better than JRCC is because every one knows coal and what it is for, and few people even know platinum and palladium and why the metals are useful. That will change pretty soon.

    So be patient, PAL will be doing better than JRCC, from here on.

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