Today’s been quite a positive day for coal miners. For investors in Peabody Energy (NYSE:BTU), this is certainly the case. At the time of writing, BTU stock has soared more than 14%, as investors flock back to “dirty” energy in a big way.
This shift in investor focus is notable. However, it may not be surprising.
As geopolitical conflicts have ramped up, so too has demand for all forms of energy. Energy security appears to be the central focus of many governments, overtaking the importance many place on sustainability and environmental impact. For Peabody Energy, this current macro environment appears to provide the perfect backdrop.
That’s because Peabody Energy is a key global player in coal production. With mines spread mainly across North America and Asia, Peabody provides thermal coal to electric utilities and metallurgic coal to steel producers. Given the inflationary environment we’re in, Peabody’s balance sheet has gotten a big boost.
However, there are other factors to consider with this stock. Let’s dive into what’s driving Peabody Energy higher today.
Why Is BTU Stock Soaring Today?
Today’s rise in BTU stock is actually a continuation of a rather impressive trend over the past year. In fact, today’s 14% rally now brings this stock to fresh new multi-year highs. As fellow InvestorPlace contributor Samuel O’Brient points out, this rally has been ongoing for some time, led by a potential ban on Russian exports of coal.
Another interesting factor providing support for BTU stock is the fact that Peabody Energy provides both metallurgic coal as well as thermal coal. That means that some of the company’s coal is used for energy, while the rest is used for steel production. Accordingly, given high demand for construction materials, this stock is seeing increased pricing power across the board. That’s not taking anything away from today’s rally in energy prices either.
Thus, there are a number of factors driving BTU stock higher right now. This integrated global coal producer appears to be a stock that’s in the right place at the right time. Today, investors are betting that more price appreciation could be on the horizon. Right now, it’s hard to bet against this thesis.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.