Does MM prefer BTU or WHC plus thoughts on FSLR please

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Question asked 26/05/2023

Does MM prefer BTU or WHC plus thoughts on FSLR please

Hi MM, 1) I appreciate you are running separate portfolios holding these stocks - WHC and BTU - but, hypothetically, if you had to choose between the two on current levels, which would you choose? It would be interesting to get your views on one versus the other. Also, in the current climate (including the falling coal price - if the data I'm looking at is correct), what price/range do you think is a screaming buy for BTU? 2) Re FSLR, I just read an article about President Biden vetoing legislation to restore tariffs on solar panels in SE Asia. What are your views on this with respect to FSLR? So far (very early Thursday trade), it doesn't seem to have affected the price... Thanks, Darren

Answer

Hi Darren,

We would chose WHC given we have better access to management, having regular dialogue with Paul Flynn which is important from both a WHC perspective, but probably more so in terms of understanding the dynamics in the broader coal market which obviously has ramifications for Peabody. As the chart below shows, Coal prices are the key to the stocks and clearly, Coal prices have been weak. Our view is, that won’t last given a host of previously covered factors however we look wrong right here and now. In terms of price for BTU, ~$US15 would be a ‘screaming’ buy however we have just bought it at ~US$20. The consensus price target on BTU is currently $US30.60.
RE First Solar (FSLR US) – Whether or not there are tariffs on Asian made panels, we doubt this will have a huge impact on FLSR, and that showed in the price on Thursday evening with the stock up on the session. Demand for panels is going up, and FSLR is in a great position to capture this trend.

chart

WHC – BTU & Coal Price

LAST UPDATED 26/05/2023 07:58

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