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Why Peabody Is An Attractive Long-Term Bet

Last month, shares of Peabody Energy Corporation (BTU) tumbled after the company posted a loss in its fourth quarter. BTU's revenue and sales volume declined on year-over-year basis, highlighting the weakness in the coal market. Although the stock has rallied in recent trading sessions, it is still down more than 8% for the year so far.

Peabody shares have fallen around 58% over the last one year, amid an extremely unfavorable state of affairs in the global coal market. While a fundamental imbalance in the coal market amid slowing economic momentum in China has sent prices down sharply, weakening prices of oil and natural gas have further weighed on the commodity.

Sea-borne coal exports hit their lowest level in a decade in 2014. Not only that, domestic demand has also been weak as utilities have switched to cheaper natural gas and oil. Prices of natural gas have fallen more than… Read More …