Up in Smoke?

In a recent Barron's feature article, Re-Energizing Peabody, author Jacqueline Doherty wrote that Peabody Energy (BTU) is expecting a good year in 2014. Peabody's chairman and CEO, Gregory Boyce, is quoted as predicting volumes, prices and sales would be up by this time next year. Barron's suggests U.S. electric utilities are returning to coal, international demand is growing, marginal mines are being shuttered and Peabody's top-line revenues will jump. One analyst quoted in Barron's article predicted Peabody's stock price would double, "to $30 or $35."

Barron's claims rely on Energy Information Administration (EIA) data. EIA forecasts always come with a long list of assumptions, some of which seem counterintuitive to those who are unfamiliar with their estimating procedures. Demand for coal is based on several factors, few of which are predictable. A key driver is the economy. If the economy continues to go sideways or slows, demand for coal will remain flat or decline....624 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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