Fording Canadian Coal Trust (Inc Trust)…

Fording Canadian Coal Trust (Inc Trust) (FDG.UN.TO)

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COMMENT

The pricing outlook for coal is fixed through 2006, met coal at US$125 a ton. Looking out to '07/'08, there are worries about the level of steel production, the extent of exports from China and price weakness. This trust gives a wonderful yield, but how long will it last.

DON'T BUY

For this year and next they are going to have tremendous cash flow. Coal prices are trading around $120 a ton. His sense is that coal prices can come back to maybe the $60/80 range.

HOLD

An excellent way of playing the steel market. The worry here is that steel has been a very poor performing commodity with over capacity and demand isn't as strong. If you own, keep some.

DON'T BUY

Can see continued downside with weaking steel demand and weaking coal demand. Once they stop going down and start to stabilize, it will be a good time to look at the sector again.

BUY

Very volatile stock. Returning to a level which is more attractive. Cash flow estimates are running at $15/16 a share level for '05. Distributions will be close to that, so at $100 you are looking at prospective yield in the 14/15% area. Metalurgical coal is facilities constrained. Can only deliver so much through the Rockies and Australians have to have new rail/port facilities which will take a year or two.

BUY

To mitigate interest rate risks, tilt your portfolio towards economically sensitive income trusts such as oil/gas sector, resource plays like Fording Canadian Coal (FDG.UN-T), Labrador Iron Ore (LIF.UN-T) as well as business trusts that can deliver you decent growth going forward. A growth in distributions will do a very good job in offsetting rising rate impacts. Expects high prices for coal will continue in '05 and '06. Restructuring to shelter against taxes.

WAIT

Hanging in pretty well in this downdraft in energy prices, partly because it pays a nice yield. There is risk as you are seeing some weakness in the price of steel which has been the big source of demand in the coal industry. Would like to add to his portfolio, but will wait to see some strength in the energy part of the market.

DON'T BUY

Need a strong stomach to deal with the volatility. He only has it in funds that are obligated to have it because they have to track the trust index.

DON'T BUY

Still pretty expensive. Looking at it.

BUY

Feels more comfortable with this than other coal stocks.

DON'T BUY

Staying away from trusts like this because of the volatility of coal.

HOLD

Coal in B.C. has been the major beneficiary of the high price and big demand for steel. This company produces metalurgical coal which is one of the components of steel. Feels this trust got way ahead of itself. Will probably be some more profit taking.

DON'T BUY

If you own, you might want to take some profit. Probably got ahead of itself through the enthusiasm for coal.

DON'T BUY

Model price is the current price. They look for mispriced stocks.

BUY

Had a fantastic run and its current pause shouldn't be too much discouragement. Contracts being signed for future delivery are all up. Doesn't see the price of coal coming under downward pressure, so you have your prices locked in. Production is rising. Thinks the payout will be increased.

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Fording Canadian Coal Trust (Inc Trust) (FDG.UN.TO)