1/ I’m in early stages of research and typically avoid commodities, but a basket of Aussie coal stocks is becoming intriguing.
$YAL.AX seems to be the stand out name, which has been popularised by @puppyeh1
Let’s take a look ⬇️
$YAL.AX seems to be the stand out name, which has been popularised by @puppyeh1
Let’s take a look ⬇️
2/ Coal prices have soared in the past year which has led to coal companies margins and share prices going through the roof.
The businesses are now left with a lot of excess cash and capital allocation decisions to make.
The businesses are now left with a lot of excess cash and capital allocation decisions to make.
3/ The appeal to coal stocks at the moment isn’t necessarily the prices staying high, but rather the return of capital via buybacks or dividends.
@YellowLabLife who pays attention to the industry expects lower prices, but not as low as before. Demand is up, supply is limited.
@YellowLabLife who pays attention to the industry expects lower prices, but not as low as before. Demand is up, supply is limited.
4/ Beyond the speculative side though, you have the more important stuff like $YAL.AX potentially paying a ~$1.50 dividend (25% yield).
Below is an image from @respeculator highlighting the dividend policy.
Below is an image from @respeculator highlighting the dividend policy.
5/ Another of the more interesting coal names is $WHC.AX, which is going down the buyback route.
Yancoal trades at a discount to Whitehaven, which implies a possible multiple re-rate for further upside on an already appealing 25% dividend yield.
Yancoal trades at a discount to Whitehaven, which implies a possible multiple re-rate for further upside on an already appealing 25% dividend yield.
6/ @puppyeh1 and @YellowLabLife somewhat differ here.
The simple difference is in quality vs valuation. Whitehaven sells higher quality coal and probably has less capital allocation risk attached. So $WHC.AX may deserve a premium multiple.
The simple difference is in quality vs valuation. Whitehaven sells higher quality coal and probably has less capital allocation risk attached. So $WHC.AX may deserve a premium multiple.
7/ there has been a lot of back and forth on Twitter around $YAL.AX and $WHC.AX.
Fintwit greats from @puppyeh1 @AndrewRangeley @respeculator @YellowLabLife have all provided some commentary.
But I don’t think there needs to be a strong stance taken.
Fintwit greats from @puppyeh1 @AndrewRangeley @respeculator @YellowLabLife have all provided some commentary.
But I don’t think there needs to be a strong stance taken.
8/ There is an obvious appeal in both names for similar reasons. Investors don’t necessarily have to pick sides.
This is where a basket becomes appealing with a few other slightly less attractive names that could enter the equation.
This is where a basket becomes appealing with a few other slightly less attractive names that could enter the equation.
9/ This thread is mostly to highlight an interesting industry with some great idea generation from the Twitter accounts mentioned. Go follow them all for commentary.
@puppyeh1 @respeculator @AndrewRangeley @YellowLabLife
Thanks to @TomInvesting for sparking interest via DM.
@puppyeh1 @respeculator @AndrewRangeley @YellowLabLife
Thanks to @TomInvesting for sparking interest via DM.
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