Grande Cache Coal Corp. (GCE.TO) Buy, Sell or…

Grande Cache Coal Corp. (GCE.TO)

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BUY ON WEAKNESS

When playing any of the coal stocks, you are really looking at what the macro environment is going to be. If China and economy does well, coal will do well. He would treat as a trading vehicle because of its volatility.

HOLD

Coal stocks all over the world have taken a pretty big hit. He would hang in with this one. Chances are if the world stays together it will go back to its old high. It was a big commodity correction over fears about China.

RISKY

Speculative buy but attractive. Theme is rising metallurgical coal prices that would be the catalyst. Tend to be a higher cost producer meaning higher leverage to the upside if prices rise and higher leverage to the downside if prices fall. Cheap relative to its competition.

DON'T BUY

Buying coal stocks depends on a view of the economy. This one is highly volatile. He prefers to be defensive at this point. Contract prices for metallurgical coal will be sent in the next 2-3 weeks and will probably be $225-$230, which implies a trade of around 5X next year's earnings.

BUY ON WEAKNESS

(Market Call Minute.) Need high coal prices to break even and thinks this is likely over the next little while.

BUY

Started to break below the 200-day moving average. Long term he believes it will recover but right now you want to get in only around $4 with a $3.75 stop loss. There may be some support coming in.

HOLD

Stock has had a great run. Think there is some more run left here but if it starts to go down he will take some off the table. At some point the price of coal has to plateau. Would not buy here, as there are better risk/reward situations.

HOLD

Good quality name, more torque for sure. The trade in coal is a lot less cyclical than other commodities.

SELL

Lock in some profits by selling half or your cost. It’s going to be a volatile ride.

BUY

Great barometer of what the economy is doing. If you believe China is growing and will still require metallurgical coal, the stock looks cheap. Very high beta versus the market so if you need some exposure on the long side, this is a good way to play.

BUY

Coal is a commodity that is on a tear and taken a lot of people by surprise. Chinese steel mills are working full out so metallurgical coal is high. Bullish on coal. Good earnings momentum.

DON'T BUY

(Market Call Minute.) Likes the metallurgical coal theme but this is a junior company and you would have to live with a lot of volatility. (See Top Picks.)

BUY ON WEAKNESS

Good-looking chart. A bit toppy at $4.50 with an upward trend line to that point, followed by a big breakout, which is always a very positive sign. Will probably consolidate here that wouldn't surprise him to see it drop to $6.

HOLD

Chinese steel demand is increasing so coal is going higher. Clean balance sheet and had some good production. He prefers the bigger US companies such as Walter Energy (WLT-N) because of better liquidity.

DON'T BUY

Coal has been very hot. Pretty high at 47X forward earnings. Extremely volatile. Technically it is hitting a peak that it hit about a month ago so it is something he would watch very carefully. Doesn't rank too highly for him.

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Grande Cache Coal Corp. (GCE.TO)