What happened
Peabody Energy (BTU 0.09%) stock is absolutely crushing the market. It was trading up 11.5% as of 3:35 p.m. ET Wednesday. With today's surge, the coal stock is now up a whopping 30% in just the past five days, as of this writing.
The escalating Russia-Ukraine conflict has given investors the perfect reason to bet big money on Peabody stock.
So what
One of the biggest repercussions of the war between Russia and Ukraine has been on commodities, including energy markets. Prices of oil and gas have shot through the roof ever since Russia's invasion of Ukraine, and that's compelled nations across the globe to look at other sources of fuel to secure their future energy needs. That includes coal power, which was dying a slow death until now when it's suddenly back on the radar of power companies.
Coal prices, in fact, have shot through the roof in recent days countries have started to use more coal to generate power in the wake of natural gas prices rising to unaffordable levels. Europe is facing a severe energy crisis as it depends a great deal on natural gas supplies from Russia.
Image source: Getty Images.
And now, President Joe Biden is set to travel to Europe this week to announce a joint action plan to boost European energy security. That could include sanctions on Russian coal, which should further tighten the coal market and send coal prices even higher.
That's all Peabody Energy, the world's largest private coal producer, needs to grow its top line.
In fact, even before prices of seaborne met coal and thermal coal reached for the skies, Peabody already saw its revenue surge 72% year over year in the quarter ended Dec. 31, 2021. The company also earned $513 million in the fourth quarter versus a loss of $129 million in the year-ago quarter.
It's therefore easy to see why investors are pumping so much money into Peabody Energy stock now, especially with the prospect of Europe imposing sanctions on Russian coal now stronger than ever.
Now what
Given how things are shaping up, Peabody Energy should be able to deliver stellar numbers for its first quarter. Its earnings release is still several weeks away, but investors are already betting big on the coal stock ahead of Biden's trip to Europe.
