Coal is the New Oil

Coal is the New Oil

August 1, 2005

Coal is the New Oil
Peabody Energy (BTU) definitely has the coolest ticker on the stock exchange; it also has the hottest stock. People have figured out that they own tons (really) of coal, that the stock price undervalues their coal reserves in the US, and that rising oil prices caused by Asia’s growth have made coal the new oil.

My good friend Jacques Berghmanns in Brussels told me he likes the company. Last week we saw why. BTU increased iought its dividend by 27% and announced a share buyback program. Looks to me like a 10-12% grower for a long time. My only concern is price. (I bought some 3 weeks ago; it’s up 22.5% since then. Up 3.7% just today! Too fast for my tastes.) Still, it is just 16 times next year’s (2006) earnings. Be nice if it would drop some so I could buy more.

JR

John Rutledge

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