October 26, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of coal miner Arch Coal (NYSE: ACI ) jumped 10% today, after reporting earnings.
So what: Revenue fell 9% in the third quarter, to $1.09 million, but was ahead of estimates of $1.01. The company also reported a surprise profit of $45.8 million, or $0.22 per share, when analysts expected a $0.16 loss.
Now what: This could be a sign that coal stocks are starting to bottom because of fundamental improvement. Prices are starting to stabilize, and even rise slightly, and demand is expected to improve. I don't think this is a reason to buy coal stocks due to long-term challenges in the industry, but I'm not as negative on the industry as I was earlier this year given how far they've fallen.
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