The shares of some U.S. coal miners are attractive, as a great deal of the negative factors afflicting the sector are already priced into stocks, Citigroup analyst Brian Yu wrote in a note to investors earlier today. The coal sector's fundamentals appear to have bottomed, as some coal miners should get a boost if natural gas prices continue to increase, Yu said. Moreover, the recent trend of power plants switching to gas from coal should decelerate during the summer, and coal production has been cut dramatically to match weak demand, added the analyst. The analyst identifies Peabody Energy (BTU) and Walter Energy (WLT) as his favorite names in the sector, partly due to their large international exposure. Alpha Natural (ANR) also looks attractive, says Yu, who has Buy ratings on all three stocks. In early trading, Peabody fell 4.06% to $25.07, Walter Energy slid 6.04% to $42.90, and Alpha Natural gave back 5.07% to $8.80.
- Peabody Energy
- coal miners