4-Star Stocks Poised to Pop: Peabody Energy

Peabody facts

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 1,664 of the 1,725 members who have rated Peabody -- 96.5% -- believe the stock will outperform the S&P 500 going forward. These bulls include NoTimeForKarma and BSHumphreyII.

In December, NoTimeForKarma said of Peabody: "[Doing] good things with their money and is doing so in a valuable market. Coal energy is still a cheap form of energy that isn't going anywhere anytime soon."

In a pitch from one week earlier, BSHumphreyII offered some other bullish reasoning:

Forget all the Obama talk on coal, global warming fantasies will take a back seat to economic reality before long. For one thing, there is no viable alternative for coal, which provides half of our electricity production.

Second, last I checked, Obama was not president-elect of China, and they're showing no signs of slowing down their unbelievable coal plant production. Peabody is building a huge coal mine in Inner Mongolia, so they'll have good access to that market.

Like most other cyclicals in this market, coal stocks are ridiculously oversold, with prices reflecting economic numbers 10x worse than they actually are.

Copyright © 2008 Universal Press Syndicate.