Have Coal Companies Finally Hit Rock Bottom?

By Taylor Muckerman and Joel South – Apr 18, 2013 at 3:49PM

OTC: BTU

Peabody Energy Corporation

Peabody Energy had some positive things to say about the future market for coal producers. How do we feel about it?

Earnings season is in full swing for the first quarter, and Peabody Energy (BTU) came out with a positive forecast for things to come. After announcing a narrower than expected loss for the most recent quarter, the company stated that both domestic and international markets show signs of strength to forge on through 2013.

Where's the bullishness coming from?
With 10% growth expected out of China and continuing gas-to-coal switching, which reverses the 2012 trend in the U.S., demand could certainly pick up. These trends are led by the increasing urbanization of the Chinese population, and the fact that natural gas prices are reaching a point where gas is no longer the guaranteed cheaper option for power generation. This battle is far from over, but Peabody's near-term outlook has coal reclaiming some lost ground.

Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.