Wednesday, October 20, 2021

Should You Buy the Dip in Peabody Energy?

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imageStock Markets42 minutes ago (Sep 23, 2021 10:31AM ET)

(C) Reuters. Should You Buy the Dip in Peabody Energy?

The price of shares of pure-play coal mining company Peabody Energy (BTU) has skyrocketed year-to-date thanks to a surge in Reddit-driven interest in the stock. However, the stock price has dipped recently. So, given the coal industry’s current supply and capacity constraints, is the stock worth betting on now? Let’s find out.Peabody Energy Corporation (BTU) in St. Louis, Miss., is one of the largest private-sector coal mining companies globally. It operates through five segments: Seaborne Thermal Mining; Seaborne Metallurgical Mining; Powder River Basin Mining; and Other U.S. Thermal Mining. Strong coal market demand and an improvement in pricing as economies recover from the pandemic have benefitted BTU significantly. So far this year, the stock has surged 482.2% in price, driven primarily by recent hype around the coal mining company on Reddit forum WallStreetBets.

However, BTU’s shares have tanked 21.3% over the past five days. Eighteen hedge funds in the database of Insider Monkey held stakes in the company at the end of the second quarter of 2021, down from 21 in the preceding quarter. Closing yesterday’s session at $14.03, the stock is trading 29.2% below its 52-week high of $19.83.

Although surging natural gas prices and a rebound in electricity demand have been a boon for the coal industry, pandemic-related supply disruptions and capacity constraints could affect the industry’s growth.

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Should You Buy the Dip in Peabody Energy?

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