Why Did My Stock Just Die? NII Holdings, Inc. (NIHD), Arch Coal Inc (ACI)

Page 1 of 2

Three out of the past four trading days have marked big moves higher for the Dow Jones Industrial Average (INDEXDJX:.DJI), putting the index within striking distance once again of the psychologically important 14,000-point threshold. Yesterday’s 99-point gain came up just short of being the fourth straight day of a triple-digit swing.

Arch Coal Inc (NYSE:ACI)Yet 70% of all the stocks listed on New York Stock Exchange moved up yesterday, leaving the three following companies to be among the more notable ones going in the opposite direction and leading the way down.

Company % Change
Arch Coal Inc (NYSE:ACI) (12.8%)
Baidu.com, Inc. (NASDAQ:BIDU) (10.1%)
NII Holdings, Inc. (NASDAQ:NIHD) (8.6%)

Now don’t go running over the cliff with them like a bunch of lemmings: It could just be a temporary situation. Let’s first see whether they had good reason to fall, as panic-fueled routs can sometimes lead to excellent buying opportunities.

In the line of fire
It’s true the coal industry is fighting for survival with one hand tied behind its back, as tough new regulations weaken demand for its output. But the larger problem is competing against natural gas, which itself is languid amid historically low prices but doesn’t have all the same baggage coal carries with it. Thus we find utilities switching from coal to gas to fire their plants, leading to lower production levels among the miners.

Arch Coal posted a wider-than-expected fourth-quarter loss of $1.39 per share, as revenues dropped 21% to $968 million. Sales volumes were down precipitously across all regions, with the Powder River Basin dropping 14% and Appalachia tumbling almost 30%, leaving it with little choice but to reduce production and close mines to try to match demand. Arch primarily sells thermal coal, though a small component is in the metallurgical coal market used for steelmaking.

Arch is looking for the uptick in gas prices here at home to help tilt the field in favor of power plants re-examining the benefits of coal usage. With colder winter weather gripping international markets — Moscow was recently hit with the heaviest snowfall in a century — U.S. coal exports ought to get a boost, too. Arch shipped 3 million tons of coal overseas in the fourth quarter, marking a record for the miner, but even it admits the number is likely to be lower in 2013 than last year. Thus, it remains difficult to generate any enthusiasm for the industry until there’s evidence coal really is recovering.

Searching for a solution
Despite holding a generally favorable opinion of China’s top search engine, Baidu, I recently expressed concern that analyst expectations for growth were much too rosy, particularly as rivals such as Sohu.com Inc. (NASDAQ:SOHU) and Qihoo 360 Technology Co Ltd (NYSE:QIHU) nipped at its heels.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!