Stocks to Sell #2: Alpha Natural Resources (ANR)
Click to Enlarge Alpha Natural Resources (ANR) is the counterpoint to Hershey: Rather than a high price and good fundamentals, it’s trading near a 52-week low — and with good reason. A weak outlook for metallurgical coal prompted the company forecasting lower sales in 2014, and its earnings estimates continue to fall for both this year and next.
The result is that ANR stock has been unable to gain ground even as the broader market has rallied, leaving its shares right above support in the $4.78 to $5 range.
On its own, this might not necessarily be a bearish sign. However, Arch Coal (ACI) and Walter Energy (WLT) — both of which are heavy on the metallurgical coal side, like ANR — are also sitting near support. The last time these two stocks tested support (about this time last year), they suffered breakdowns that precipitated weakness that lasted until mid-summer.
Coal stocks will be a lottery ticket for investors who can time the recovery, whenever it may occur. For now, however, the charts for these three stocks are indicating that the risks continue to outweigh the rewards.