NEW YORK, NY -- (Marketwire) -- 02/09/12 -- Shares of companies in the coal industry have lagged in the market in 2012. Several miners are expected to reduce production further this year as demand falls in the U.S. and Europe, Dahlman Rose analyst Daniel Scott explained in a recent research note to investors. Scott said the production cuts are "necessary given current conditions." Five Star Equities examines investing opportunities in the coal industry and provides equity research on Arch Coal, Inc. (NYSE: ACI) and Peabody Energy Corporation (NYSE: BTU). Access to the full company reports can be found at:
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Analysts such as Dahlman's Daniel Scott argue that Europe will need less U.S. coal as its economy struggles through a deep financial crisis. Meanwhile, with natural gas prices near ten year lows, North American Utilities companies are expected to rely more on abundant natural gas.
Citigroup analyst Anthony Yuen argues that natural gas prices could resume falling, spurring even more utilities to switch from coal to gas for power generation. Yuen said several factors could keep pushing gas prices down, including strong production and mild winter weather.
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Peabody Energy expects to sell between 245 million to 265 million tons of coal this year, compared with 250.6 million tons in 2011. For the fourth quarter, the St. Louis company reported income of $222.4 million, or 82 cents per share. That compares with $210 million, or 77 cents share, for the same part of 2010. Revenue increased 26 percent to $2.25 billion.
Arch Coal, Inc. engages in the production and sale of steam and metallurgical coal from surface and underground mines located throughout the United States. As of December 31, 2010, it operated or contracted out the operation of 23 active mines and owned or controlled approximately 4.4 billion tons of estimated proven and probable recoverable reserves.
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