Will this finally be the quarter where coal makes the comeback companies have been talking about? Peabody Energy's (BTU) management has been expecting a sharp increase in demand for the rest of the year, bur we have yet to see that happen. For investors keeping track of Peabody, there are a few trends you should watch that will help you gauge how Peabody will perform against its peers.
First, how much further has central Appalachian coal declined? This has been a weak spot for the U.S. coal market. Of the big four coal companies that hold 50% of total market share, both Peabody and Cloud Peak Energy (CLD) have no assets there, which is a major benefit. Another thing to consider is how domestic metallurgical coal has done recently. Pricing has been very weak in this market, and met coal-heavy companies such as Alpha Natural Resources (NYSE: ANR) have been forced to shut in some of its metallurgical capacity. Peabody, on the other hand, doesn't have any metallurgical coal in the United States.
Does this make Peabody Energy a buy? Tune in to the following video, where fool.com contributors Tyler Crowe and Aimee Duffy look at some other things to watch for in the coal market and see whether Peabody is worth adding to your portfolio.
