North American Versus Australian Coal: An Expert Coal Analyst Discusses the Global Dynamics Affecting This Commodity in an Exclusive Interview with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - April 16, 2013 - The Wall Street Transcript has just published its Metals and Mining Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Precious Metals, Global Iron Ore Production, Emerging Market Infrastructure Construction, Midcap and Small-Cap Consolidation Activity

Companies include: Peabody Energy Corp. (BTU) and many more.

In the following excerpt from the Metals and Mining Report, an expert analyst discusses the outlook for the sector for investors:

TWST: You are generally bullish on coal. What are the primary factors contributing to your view at the moment?

Mr. Beard: I think coal stocks, like any other commodity stocks, trade in a way that when things are good, that's when you sell them, and when things are bad, that's when you buy them. That's how cyclical stocks work. There is a period in between those two points where you buy them because the earnings are going up, and you sell them because the earnings are going down, but that's only in between these two points.

So in general, when you see weak prices and production cuts, you get to a point where you end up overshooting on the production cut side and once inventories get worked down, and the cycle starts all over again, as prices must rise to bring shuttered production back on line.

When you look at the coal stocks, you have to separate what's happening on the thermal side, which is all electricity generation and the coking coal side. But in general, both of those products are seeing pretty substantial production cuts.

In other words, coal stocks cycle from momentum longs, when things are good and EPS are going up to contrarian shorts, when the stocks are cheap but stop going higher; to momentum shorts, as stocks are falling and EPS estimates are getting cut; to contrarian longs, when things are bad but the stocks find a bottom, and the cycle starts again.

TWST: What are the key risks to your bullish view on coal?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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