The wickedness of the rally in coal stocks

I had a difficult time reading the equity rally in the Australian coal companies such as Whitehaven and New Hope.

I appreciated them being the lowest cost producer of energy but I couldn’t wrap my head around their profit estimates….

let alone their soaring stock prices.

I never owned them and they weren’t on my radar…but if I had bought Whitehaven Coal around $1 per share in the 2nd half of 2020, I can imagine selling at $3.00 or $3.80.

Whilst not being flippant nor ungrateful about an imaginary 300% return……can you see the pain that would’ve been inflicted watching it rise to $10.

All of those of supposed profits are not the point….I couldn’t ‘get a read’ and understand it.

This is when it can ‘go without me’.

Although, I also knew not to chase it and subsequently enter a new position because if I couldn’t grasp the entry point, how could I read the potential exit?

Throughout the parabolic rise, I knew to stay away and still I think there is risk Whitehaven’s stock price can pullback to the $4 range.

February 12, 2023

by Rob Zdravevski

rob@karriasset.com.au