Today I added another 1/4 to my target position in BTU bringing my total investment to 175% of my target allocation. I have been buying BTU since 1/19/11 and in equal 1/4 increments through today 5/8/12.
This stock has been my single biggest loser. However I intend to Stay Long in the Land of OZ as Credit Suisse (12 month price target of $44) calls BTU.
“…We believe BTU remains the most attractive way to play the global coal recovery…” Credit Suisse Report
Another reason why I remain bullish on BTU is that coal production has been cut to epic lows. According to Mark Anthony, coal production cut to a 5 year low.
Mr. Anthony states
It’s more so as the ongoing production cut must lead to a coal price rebound and coal mining stock rally, but people do not know these numbers yet. Last week’s plummet in coal stocks thus provides another excellent buying chance.
Despite that Credit Suisse believes domestic consumption could decline in excess of 100m tons in 2012 in the United States, Australia is seeing strong demand due to rebounding steel AND due to weather, labor and mine closures supply has been reduced by as much as 15m tons.
BTU seems undervalued a PEG value of 0.5152, one of the lowest in the Coal industry
PE is 7.8273, is also lower than the industry median of 13.07.
Disappointing stock price performance, modest growth in net income and high but manageable debt.