Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

September 23, 2012 - Walter Energy 2012 Risk/Yield Update

The last write-up on April 15, 2012 (below) indicated this company was moving into a "yield area" which had some potential for an uptick.  As it turns out, May had some downtrends both on the global front (see updated GLOBAL graphs) and in the energy market specifically with coal used for electricity.  Both of these factors negated any potential that this company may have had in the May period.

This write-up includes the new version of the graphs (updated algorithms).  The graphs indicate a slow movement towards equilibrium (0 point) for this year.

The USA economy (see USA economy) is likely to trend better for a short while before the presidential elections and this could "lift all boats" including this one.    





 
April 15, 2012  -- Walter Energy Risk/Yield 2012

Walter Energy is one of the companies that we keep on coming back to time and time again.  This company's chart was one of the first that had indications that commodities were moving towards a fall "off a cliff" in 2008 (see the 2008 charts for Walter Energy).  We also covered Walter Energy in February of 2011 (see MJ's New & Noteworthy) shortly before the spring flooding of that year and one of the problems identified at that time was the means of transporting their product to their customers from the facilities concentrated in one geographical area. From last checks, their operations in this part of the country would use either rails or rivers to transport coal to ports for shipping to customers.  As a note, last April also saw the tornado outbreak in Alabama. With their integration of the Canadian acquisition, their products are now more resilient to geographical or weather related problems. Refer to article about cost increases in 2011 due to weather and geology related issues.

The astrological configuration for Walter Energy shows significant "yield" momentum for the late spring/early summer of 2012. The earnings for this company are likely due around the May 2012 period and could explain the "yield" surge.  Also, the USA economy graph (located on home page) does indicate a uptick in the USA economy later in the 2012 year and with that information, it would not be surprising to have increased shipments of coal for steel production occurring earlier in the year.

Another factor that could explain a possible stock price jump is that coal producing companies have all been linked into the same "kettle" and yet, there are distinct types of coal used for different purposes - one type of coal is used to generate electricity while yet another is used to fire plants that make steel.  The coal that is used to make electricity might be substituted by natural gas (refer to article - Exxon sees natural gas  replacing coal as the leading fuel to generate electricity by 2025).  The coal that is used for making steel cannot be totally replaced by natural gas (refer to article stating that up to 10% of coal could be replaced by natural gas). 

This company might be one to watch as it moves closer to earnings.

 
       Walter Energy Delta Core/Transient 2012 Graph


       Walter Energy Risk/Yield 2012 graph
 
Disclosure as of 4/15/2012 - Walter Energy (WLT) is not part of our portfolio at this time.
Disclosure as of 4/26/2012 - Walter Energy (WLT) has been added to our portfolio as of today.