Editor's Note: This content was originally published on Benzinga.com by Gordon Wilcox.
Revisiting the theme that price alone is not the true determinant of a stock's total value is a task worth repeating from time-to-time, even more so when investors find themselves seduced by the temptation of volatile single-digit stocks.The temptation is easy to understand. After all, $10,000 in capital buys a lot more shares of an $8 stock than an $80 stock. Of course, it is this conventional way of thinking that has plagued so many investors in the past when it comes to single-digit stocks.
Still, not all single-digit stocks are afflicted with that condition forever. Many have the potential to graduate to $10 and beyond. Here are some candidates to make that move in 2013, though in a couple of examples while $10 may be a real possibility, how long the stock stays there is up for debate.
Alpha Natural Resources (NYSE:ANR): Like many coal stocks, Alpha Natural spent the bulk of 2012 plunging. With just a few trading days left in the year, the stock is down 54.5%. The primary catalyst behind Alpha Natural's 2012 woes has been thermal coal demand or lack thereof. Thermal coal is the coal variety used by electric utilities, but with natural gas prices depressed, utilities have turned to cheaper, cleaner gas as an alternative.
Slack thermal coal demand prompted Alpha Natural to announce?significant production reductions?in the third quarter. Investors may remember that Alpha Natural acquired Massey Energy to increase its exposure to metallurgical coal, the coal grade used in the the production of steel.
That move has not worked out so well, at least not yet, because metallurgical coal demand by emerging markets consumers has waned, forcing prices lower. Weak metallurgical coal demand is also one reason why?Standard & Poor's recently lowered Alpha Natural's credit rating?to BB- from B+. That downgrade takes the company deeper into junk territory.
All of this may imply that Alpha Natural is a stock to stay away from. However, the shares have jumped 29.4% in the past month. Additionally, Alpha Natural is positioned to take advantage of any significant increase in natural gas prices because that would force utilities back to thermal coal. Or the Chinese and Indian economies could rebound enough to jolt metallurgical coal prices. With a beta of 1.68 and the shares flirting with $9.30, Alpha Natural could easily hit $10 in the near-term. Bullish economic data points out of China could carry the stock even higher.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
les paul fred thompson fred thompson red hook romney tax return the tree of life movie academy award nominees 2012
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.