Peabody Energy Corporation (NYSE:BTU), a coal mining company, ended the last trading session with a gain of 2.12% and that was one of the rare days. This stock has been in a huge bear market since 2011 and the price has declined by 93% in that period or in other words, only about a 1400% gain would recover all the losses made. So any day the stock is not losing value in the market place is a good day for the stock. The current interest in the stock stems from the Balyasni Asset Management picking the stock as a value pick.
Naturally, the biggest factor for this huge decline has been the declining price of coal. Both coal and Peabody Energy Corporation (NYSE:BTU) peaked in 2011 and the bear markets for the two instruments have followed the same path. With oil, natural gas and even shale gas dropping like stones, the mining cost of a ton of coal is greater than the average price of a ton of coal sold in Powder River basin, the largest region representing more than 60% of the company’s production.
Peabody Energy Corporation (NYSE:BTU) has been hurt badly in the last few days from the US government changing the way of collecting royalty from the coal mined from the federal land, which will increase the royalty cost for the company a lot as most of its mines are in federal lands.
Technically, the weakness is evident from the nonstop decline of the price of the stock. What may not be so clearly visible is that the stock is testing its lifetime lows, levels last visited in 2002-03. That may attract some serious value investors and push the stock a bit higher. The volume pattern in the last few months shows a lot of distribution but there is the hint of some accumulation too.
