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April 21st, 2014 at 11:35 am
Barron's thinks CLD CloudPeak a coal producer could rise 30%
Spun out from Rio Tinto (RIO) in 2009, Cloud Peak's coal is desirable for two reasons: a low production cost and low sulfur content in a world focused on reducing airborne pollution. Cloud Peak can take advantage of expected price increases for thermal coal, with roughly 40% of 2015 production not yet contracted for sale.
But Cloud Peak can wait for prices to rise: It ended 2013 with $232 million in cash, and could boost its cash position this year, while Alpha could burn through roughly $500 million and Arch, $200 million, Chen estimates.
Cloud Peak's enterprise value to the consensus 2014 Ebitda multiple is about 8 times, compared to roughly 11 times forPeabody Energy (BTU), the largest U.S. coal producer, nearly 17 times for Arch, and more than 20 times for Walter.