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Bull of the Day

 

Finally this hard fought election has come to an end. With it, the Hillary trade is over. So that means that stocks that took a punch heading into November have a good chance of rebounding. That’s why you saw a sharp rally in stocks in industries like raw materials and construction. But the pro-Trump trade now is being especially beneficial to coal companies like today’s Bull of the Day.

Cloud Peak Energy (CLD - Free Report) produces coal in the Powder River Basin in the United States. The company operates through Owned and Operated Mines, and Logistics and Related Activities. It owns and operates three surface coal mines comprising the Antelope Mine and the Cordero Rojo Mine located in Wyoming, and the Spring Creek Mine located in Montana. These mines produce subbituminous thermal coal with low sulfur content. The company sells its coal primarily to domestic and foreign electric utilities. As of December 31, 2015, it controlled approximately 1.1 billion tons of proven and probable reserves.

The stock was a Zacks Rank #1 (Strong Buy) heading into the election and should catch even more positive news following Trump’s victory. A big reason for the Zacks Rank is three analysts have increased their earnings estimates for next year. The bullish sentiment has push up our Zacks Consensus Estimate from a 74 cent loss to a 6 cent gain. That’s a huge swing in a very short amount of time.

That bullish sentiment has been met with a huge rally in the stock. Taking a quick look at the stock chart, you can see that shares have gone from $2 in July to nearly $8 during yesterday’s trading session. All the while, shares have consistently remained above the 50-day moving average. The last “Buy” signal coming from the Commodity Channel Index occurred in late October with the CCI crossing up through the zero line after being well oversold below -100. The large gap in yesterday’s trading does run the risk of getting filled should profit-takers enter the equation in the short term.

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