PowerPoint Presentation

3 Things You Need to Know About Peabody Energy

1. Stock Performance

1) Stock PerformancePeabody Energy (NYSE: BTU) is the largest non-state operated coal company in the world.

1) Stock PerformanceBut bigger isnt always better. Peabody Energy stock has been volatile, to say the least.

The double-whammy of an upended energy sector, as well as the Global Financial Crisis (GFC), has kept energy investors on the edge of their seats for the last decade.

1) Stock PerformanceIf you bought Peabody shares exactly 10 years ago and sold just before the GFC hit, you pocketed 550% stock price gains.

Thats well above the S&P 500s (INDEX: ^GSPC) measly 15%.

1) Stock PerformanceBut if you bought Peabody shares in early 2005 and are still hanging on, your stock hasnt gained a single cent.

1) Stock PerformanceOn the upside, Peabody Energy has consistently raised its dividend throughout, although its erratic stock price has pulled yields up and down over the past decade.

2. Transportation Costs

2) Transportation CostsDespite Peabodys rapport as a multinational coal company with customers across 25 countries and six continents (sorry Antarctica), its assets are fairly concentrated.

2) Transportation CostsThe company has a dominant presence in the Powder River Basin in Wyoming and the Illinois Basin in Illinois and Indiana.

2) Transportation CostsPeabodys North Antelope Rochelle mine in Wyoming accounted for a whopping 111 million tons of coal sold in 2013.

Thats more than double the volume sales of its six next largest mines!

2) Transportation CostsNearby utilities like FirstEnergy Corp. (NYSE: FE) and American Electric Power Company (NYSE: AEP) have stuck with coal as their main fuel source.

For these companies, low transportation costs means coal is the fuel of choice.

2) Transportation CostsBut a growing natural gas pipeline network and proliferationof Midwest wind farms are eroding Peabodys transportation cost advantage.

2) Transportation Costs

Its windy incoal country.

3. Global Opportunities

3) Global Opportunities

3) Global OpportunitiesWith only 2% of its U.S. coal exported and domestic growth prospects dwindling, Peabody will need to look abroad more than ever before.

3) Global OpportunitiesThermal coal, used primarily to generate electricity, is getting hit by environmental policy from all sides.

The U.S. is cutting it out of its energy system, but even China and India are taking steps to wave goodbye to this carbon- and smog-producing fuel source.

3) Global OpportunitiesOne of Peabodys steadiest international opportunities comes from metallurgical coal, used to create steel and relatively irreplaceable.

In 2013, worldwide steel production increased 3.5%, pushed into the positive by Asia alone.

3) Global OpportunitiesIn 2013, Peabody sold 15.9 million tons of metallurgical coal.

Thats 13% more than in 2012 and 71% more than in 2011.

3) Global OpportunitiesFrom 2013 to 2016, Peabody expects metallurgical coal demand to grow 10% to 15%.

And while it also expects overall coal demand to rise significantly, this prediction depends much more on precarious policy in China and India.

Peabody EnergyHistorically lackluster stock price gains are no reason to not buy Peabody shares.

But a tough U.S. market is.

Peabody EnergyInvestors will want to weigh Peabodys international opportunities carefully before marking this stock a buy.

And even with potential upside, dont forget to price in the risk of adding an international coal company to your portfolio. The risk of further decline is just as real as potentially massive upsides.

Hedge Your Coal Bet With Something SaferA coal investment carries a great deal of risk, and smart investors are hedging their bets with other energy stocks. You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably havent heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of Americas greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, The IRS Is Daring You to Make This Investment Now!, and you'll learn about the simple strategyto take advantage of a little-known IRS rule. Don't miss out onadvice that could helpyou cut taxes for decades to come.Click hereto learn more.