{"id":24465,"date":"2011-10-13T13:55:56","date_gmt":"2011-10-13T17:55:56","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/10\/13\/walter-energy-on-the-block\/"},"modified":"2011-10-13T13:55:56","modified_gmt":"2011-10-13T17:55:56","slug":"walter-energy-on-the-block","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/10\/13\/walter-energy-on-the-block\/","title":{"rendered":"Walter Energy on the Block"},"content":{"rendered":"

Walter Energy on the Block<\/a><\/p>\n

by Justin Dove<\/a>, Investment U<\/em> Research
\nThursday, October 13, 2011<\/p>\n

It was just last week that David Fessler talked about the positive outlook for coal<\/a> and that Walter Energy<\/strong> (NYSE: WLT<\/a>) was one of the most likely companies to benefit.<\/p>\n

On Thursday, rumors spread that Alabama-based Walter Energy was a takeover target of mining giants Anglo American plc<\/strong> (OTC: AAUKY.PK<\/a>), BHP Billiton<\/strong> (NYSE: BHP<\/a>) and possibly Vale S.A.<\/strong> (NYSE: VALE<\/a>).<\/p>\n

Bloomberg<\/em> reported that \u201cdemand from steelmakers in China and flood-related supply disruptions in Australia have driven prices for the raw material to record highs.\u201d<\/p>\n

Walter Energy shares spiked in early September to just over $90 per share after the London Times<\/em> reported that Anglo American was offering $120 per share \u2013 about 60 percent more than shares were trading mid-day on Thursday.<\/p>\n

If the three companies are engaging in a bidding war, it could mean even more of a premium for Walter. The Times<\/em> added that Anglo American could potentially boost its offer to $150 per share if needed \u2013 more than a 100-percent premium to the mid-day value on Thursday.<\/p>\n

Walter Energy: A Solid Buy-Low Opportunity<\/strong><\/p>\n

Spokespeople for Anglo American and BHP declined comment to Bloomberg<\/em>, but Walter would offer a solid buy-low opportunity for the mining companies.<\/p>\n

\"Walter<\/p>\n

As you can see in the graph above, Walter\u2019s stock was hammered down to the 70s after reaching a high of $143.76 in April. The drop, much to do with macroeconomic concerns, came despite raising its second-quarter profit by $0.20 per share.<\/p>\n

The Bottom Line for Walter Energy
\n<\/strong><\/p>\n

At its current levels, Walter looks like a bargain for potential acquirers and investors alike. The coal industry<\/a> as a whole has a positive forward outlook as outlined by David Fessler.<\/p>\n

Even with the recent spike due to rumors, Walter itself appears cheap, with a P\/E around 10 and an EPS of $7.44. Considering the 52-week high is $143.76, the stock may have plenty of room for improvement before it becomes too expensive for investors.<\/p>\n

Good investing,<\/p>\n

Justin Dove<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n

Article by Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"

Walter Energy on the Block by Justin Dove, Investment U Research Thursday, October 13, 2011 It was just last week that David Fessler talked about the positive outlook for coal and that Walter Energy (NYSE: WLT) was one of the most likely companies to benefit. On Thursday, rumors spread that Alabama-based Walter Energy was a … <\/p>\n

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