A Big Upgrade for Arch Coal

Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks -- and the track record of the firms behind them -- so that individuals can make better investing decisions.

In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 120,000 members, many of whom demonstrate better investing insight than published analysts do.

More top-performing CAPS members are turning bullish on Arch Coal (NYSE: ACI  ) these days -- the coal miner has moved from its four-star rank up to the highest ranking of five stars. Arch Coal's upgrade in star ranking portends great things for the stock, and the 1,153 members giving their opinion on Arch Coal have offered many opinions as to why.

The recent market panic has obliterated share prices of coal miners like Arch Coal, Patriot Coal (NYSE: PCX  ) , and CONSOL Energy (NYSE: CNX  ) . With steelmakers like ArcelorMittal (NYSE: MT  ) and Nucor (NYSE: NUE  ) cutting back production, demand for coal will likely slow, but many investors see an opportunity too good to pass up. It's not hard to see why -- Arch Coal's third-quarter net income tripled over last year, and the company expressed optimism in the long-term fundamental strength of its market, despite current conditions.

Management also says that its balance sheet is the strongest it's been in the history of the company, something that will be a large benefit during the economic crisis. It's also on the lookout for acquisition opportunities that become available, the way  competitor Peabody Energy (NYSE: BTU  ) is already exploring more cash-generating opportunities in China.

With China's recent stimulus package calling for more development of housing and infrastructure, potential demand for commodities could benefit many companies from coal miners, to steelmakers, to copper miners like Freeport-McMoRan (NYSE: FCX  ) . Arch Coal has already scheduled test shipments and burns of its coal in China that could lead to significant business in the PRC. With all the potential opportunity in coal, 96% of the 1,153 CAPS members rating Arch Coal expect it to outperform the market.

To see what the very best CAPS analysts are saying now about Arch Coal -- as well as other winning stocks they are picking -- head on over to CAPS and have a look.

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Fool contributor Dave Mock recently upgraded his lawn with a few new sprinklers. He owns no shares of companies mentioned here. The Fool's disclosure policy has its own coal-fired power plant in the backyard just in case one of those catastrophic predictions come true.


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