January Trade Update

Peabody Energy's Inclusion In The S&P 600 Index, Three Recent Trades & What's On The Watchlist

The first couple weeks of 2024 have been interesting in financial markets, and I wanted to update readers on recent trades and a couple things I’m watching. I’ll touch briefly on some news in the coal sector and what’s on my watchlist right now. I also talk briefly about oil and the offshore sector, where sentiment is down in the dumps. I have been adding recently, and I’m looking to continue to do that over the next couple weeks. I will be writing a post on the offshore sector next week, where I go into it in more detail. I’ll also touch on a couple smaller holdings, including a dividend reinvestment in one holding, and a stock that has been a complete mess to start 2024.

Two Ideas

I’ll start with my two ideas before getting into some of the recent trades I have made. One is a cash cow in the coal sector, and the other is a speculation on the future of battery technology. I haven’t been adding to either in recent weeks, but they are on the watchlist for sure. I haven’t made it a secret that I’m bullish on the coal sector, and today we got another reason to be bullish on the red-headed stepchild of the coal sector, Peabody Energy BTU 0.00%↑.

Peabody Energy

I haven’t been doing any buying on Peabody Energy recently, but I would be lying if I said I wasn’t tempted to buy some more of the January 2026 calls. You might be getting tired of me pounding the table on Peabody at this point, but I think it is a very attractive opportunity today. I wanted to mention Peabody because shares popped almost 5% after hours yesterday on news of their inclusion in the S&P 600 small cap index. I think these flows would at least offset any selling that Elliott Investment Management still has to do, and it could be a catalyst to get shares out of the trading range they have been stuck in for nearly two years.

For reference, Alpha Metallurgical Resources AMR 0.00%↑ was added to the S&P 600 Small Cap Index on November 7, 2023. Shares were just over $207, and a little more than 2 months later, shares now trade for $377.43. I’m not predicting the same 82% move in a couple months for Peabody, but I think it’s just another reason to be bullish. I’m looking forward to seeing their financial statements for the full year, which should be out in the next month or so. We will see how the next couple years play out, but I think we could start to see Peabody generate some of the returns for investors that we have seen with other coal stocks in the last couple years.