Macarthur Coalproduces high quality coking coal, which is used...

Macarthur Coal


produces high quality coking coal, which is used as a part of the steel making process. The company is not popular right now, and trades on a forecast PE of around 3.5 times. Given the higher earnings expectations this year (FY09) from higher contract coal prices, the forecast dividend yield is 14%. The market is basically pricing in a sharp reduction in contract coal prices, so no one believes the forecast numbers. However, strategic buyers paid $20 a share for this stock just a few months ago and while that was probably too high, we believe the market is currently being too pessimistic.

http://www.australianstockwatch.com/2008/12/stock-picks-yr-2008-2009.html