Super Monkey Portfolio Addition: Peabody Energy
Andrew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Welcome to the Super Monkey Portfolio. The Super Monkey Portfolio was created with three simple goals: beat the market, make money, and have fun. Stocks selected for the Super Monkey Portfolio are originated through a random ticker generator. From there, my resident Super Monkey makes his selections based off of a list of qualifying factors and criteria.
After taking a vacation the last few days, I now return to continue to build the portfolio. When I opened up the Super Monkey Portfolio, I was pleasantly surprised to find some modest increases across the board. Below is a list of our current big winners:
- New Park Resources (NYSE: NR): Despite having a bad day yesterday, this stock is leading the portfolio with an increase of more than 18% since inception. NR provides services to the oil and gas exploration industry. Please click here for the article about New Park Resources.
- Mosaic Corp. (NYSE: MOS): Mosaic is the second highest gaining stock in the Super Monkey Portfolio with an increase of 10.15%. MOS is a producer and marketer of phosphate and potash nutrients for the agriculture industry. Please click here for the entry article about MOS.
Overall the Super Monkey Portfolio is up more than 8% since inception, with no stock held that has decreased in value since it was purchased. The DJIA over this same period of time is up only 5%. The current selection of stocks have been a great start, and it's time to continue to add to this portfolio to spread out risk and maximize returns.
About the Company
Peabody Energy Corp. (NYSE: BTU) was founded in 1883 as a coal retailer. Currently, the company sells 246 million tons of coal worldwide, making Peabody the largest private-sector coal provider in the world.
Reasons for Consideration
It’s no secret that coal and other commodity prices are on the rise. With increasing demand and increasing prices for coal, Peabody has a coal reserve of more than 9 billion metric tons that are eligible to be re-priced and sold at the increased price. From 2005 to 2010, some of the toughest times economically, Peabody experienced a revenue compounded annual growth rate of 13% and EBITDA CAGR of 21%. Over the past 52 weeks, Peabody’s stock price is down over 42%. Other key statistics that were involved in this decision include:
Forward P/E: 7.46x
Price to Book: 1.85
Return on Equity: 19.83%
The one concern that I had in including Peabody in the Super Monkey Portfolio is the amount of debt listed on its balance sheet. With debt of $2.5 billion and cash of $1.4 billion, Peabody doesn’t have enough cash to pay off debt completely. However, Peabody redeemed itself with a quick ratio of 1.84x.
Overall, there are signs that this is a classic value buy and with significant positive earnings expected to be released later in January, Peabody should be a good buy for the Super Monkey Portfolio.
The Motley Fool has no positions in the stocks mentioned above. dillarda has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.