Cramer on Monday revisited Cloud Peak Energy, whose IPO he recommended back in November . While the stock didn’t take off as he expected, an upgrade today from Credit Suisse warrants another look.
Cloud Peak opened at $14.50 on Nov. 20, 50 cents below it’s offering price. But that is because investors worried that the money being raised was going to parent company Rio Tinto . The sell-off, though, gives Mad Money viewers an opportunity to buy the stock at a discount.
And Cramer does still likes Cloud Peak. The company operates in the Powder River Basin, mining the region’s low-sulfur coal. The area allows for easy access to the Western coasts where it’s easy to ship to China. The cleaner coal is cheaper for the US utilities to burn because they do not have to purchase more expensive scrubbers.
Cramer agrees with the Credit Suisse report that the best time to buy a mining company is when inventories are high and prices are low. Cloud Peak is also cheap versus its competitors, trading at 28% discount to the average coal stock. Cramer thinks you should consider buying Cloud Peak after it reports earnings, as long as the results look good.
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