Initial Entry – Coal Boom

Brad Holland

Brad has over 20 years experience in the Australian and US equities and options markets. Brad specialises in equities and options for capital growth, income generation and capital protection. He also specialises in finding opportunities in small to medium cap stocks. Brad holds RG146 - Securities & Managed Investments and Accredited Derivatives Adviser Level 2 qualifications.

October 7, 2021

AHQ.AX | High Conviction Report

This is a short outline of why we are opening a position today in Allegiance Coal (AHQ). For those wanting to read more about AHQ, we have posted detailed research a while back.

Allegiance Coal (AHQ) is a coking coal producer in the USA producing from two coal mines:

  1. New Elk mine located in Colorado
  2. Black Warrior mine in Alabama

AHQ takes the high-quality coal produced at the new Elk Mine (low Sulphur content), blends coal with a lower quality (high sulphur) product from Black Warrior. The end result is high-quality coal that AHQ calls the Pratt blend. Blending the coal is a value-enhancing opportunity.

As per the company’s recent announcement on the 21st of September, they have a near term production horizon that will allow them to benefits from elevated coking coal prices in the short term.

AHQ has based their Net Present Valuation around a Free On Board price for their coal of US$131. With coal prices significantly above this level, the share price has further the run.

TRADE ENTRY DETAILS

Entry : Buy at limit up to $0.70

Position size : 10,000

Stop Loss : $0.45

Target Price : $1.10

Notes: Volume can be low in this stock do not chase the share price higher

This is general advice only. MF & Co Asset Management has not considered your personal financial needs, objectives or current situation. This information is not an offer, solicitation, or a recommendation for any financial product unless expressly stated. You should seek professional investment advice before making any investment decision.

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