Is it Time to Buy or Sell Whitehaven Coal?

What happened to Whitehaven’s share price?

Shares of Whitehaven Coal [ASX:WHC] were up 3.02% on Wednesday, closing at $2.73. This made them the 10th best performing ASX 200 stock for the day. It also took their market cap to just over $2.8 billion.

What’s going on with the Whitehaven’s share price?

Whitehaven has been on a huge march forward over the last year, being the best performing ASX 200 stock with a gain of 550%. That’s seen the stock go from around $430 million in size to over $2.8 billion in just 12 months. Incredible stuff for a ‘blue chip’ stock.

This is truly once of the perfect examples of a bounce-back stock. Whitehaven has been in a downward spiral since 2011, when it peaked at over $7.20. This time last year is was just 35 cents. Now, with a huge 2016 under it’s belt and a great start to 2017, is it time to buy Whitehaven Coal in the hope it heads back towards $7? Or is it time to sell up and clear some profits off the table?

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What now for Whitehaven Coal Ltd?

The Australian government has openly come out and said that they will support ‘cleaner’ electricity generation from coal. Australia has always been reliant on coal as a source of energy. It’s one of the country’s major resources.

But it is also the whipping boy for greens and environmentalists looking for a ‘greener’ and ‘cleaner’ future. This is part of the reason why Whitehaven has been in a six-year decline. Along with a commodities boom that’s seen many resource companies slashed in size, Whitehaven was the kind of stock you simply had to avoid…until now.

With a focus back to coal but in a more efficient and clean way, this former favourite stock of the ASX may be returning to its glory days. As technology develops to find better, cleaner ways to burn coal, it may just end up being a resource that once again is a darling of the markets.

If the recent performance by Whitehaven is anything to go by, 2017 could prove to be as outstanding as 2016. But of course with any stock that shoots up that high that fast, be wary of pullbacks and opportunities to cash in some gains and clean those profits off the table.

Sam Volkering,
Money Morning


Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

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