Coal stocks on a spectacular run
The post-election rally in all kinds of coal -- good and bad, clean and dirty -- just won't quit.
Who in heck gave the green light to coal? This post-election rally won't quit, even as it has been almost a week. These stocks act as if the government has spoken and decided that coal is the protected fuel.
Now, it is true that some of the big natural-gas players, like Devon (DVN), Range (RRC) and Chesapeake (CHK), have caught bids, and natural gas is threatening to take out $4. But this is a spectacular run in coal of all kinds -- good, bad, dirty and clean.
Massey's (MEE) "for sale" sign has brought out talk of heavy consolidation and sent both potential acquirers and targets rallying. Patriot (PCX) is a target, Arch (ACI) a buyer, Peabody (BTU) a buyer, and Cloud Peak (CLD) a target. Consol Energy (CNX) also is a buyer, and Walter (WLT) could be a target. The latter still doesn't have a CEO after a long search, and even though it is as at its 52-week high, it has the highest-quality coal seam for steel in the country -- coal that the Chinese value the highest of any in the world.
They are all moving up.
I think this move is all about the emasculation of the Environmental Protection Agency and the demotion of the congressional Democrats who care first about clean air. Those people have really been shut out. I think this change from the election is the most profound, and it comes at just the time when China has a big coal shortage.
I remain convinced, as I wrote here last week and told Debra Borchardt in a video Monday, that the preferred way to play it is Peabody. It has the cleanest coal, from the Powder River Basin, and it has Australian coal for China. But the bigger story is all about regulation and its undoing.
At the time of publication, Cramer had no positions in the stocks mentioned.
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Activists seem to be lurking everywhere, and boards of directors are listening to them. It's all part of an unexpected 2014 landscape that's making the market tough for negativists.
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