Peabody Profit Warnings

I sense that Grogory Boyce, CEO of Peabody Energy (BTU) is trying to tell us something:

"Peabody is capturing higher prices on expanded volumes and delivering record financial results"

“Our operations are positioned to deliver even stronger second half performance"

“The global market fundamentals for coal continue to strengthen”

And it goes on. This is a profit warning of the most positive kind.

You won't find many 10Qs more bullish than BTUs latest earnings release. EPS is up 150%, net income is up 150% etc.

The curious thing about their results is that nearly all the income growth is due to the rising coal price. Is guess this is the norm for commodities companies but it begs the question of whether the coal price can keep rising.

BTU present quite a convincing case that it can: low inventory levels worldwide, high oil and gas prices, China's coal imports are growing, the US is building coal-powered generating plants and global steel demand is growing.

My plan is to dispose of my Google shares after their 10Q on Thursday and buy either Vedanta Resources, Dana Petroleum or Peabody.

I will look further into the other two this week but for now BTU looks fantastic.