Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of coal producer Walter Energy (NYS: WLT) sank 10% on Wednesday after cutting its third-quarter earnings outlook.
So what: While Walter blamed the downside guidance -- management now expects to sell 5.2 million metric tons of coal versus previous forecasts for 5.9 million tons -- on record rainfall, Wall Street is also interpreting it as a sign of global coal demand weakness. In fact, coal peer Alpha Natural's (NYS: ANR) stock is also down big today after cutting its full-year production, specifically citing the slowdown in the Asian steel market.
Now what: I'd look into today's plunge as a possible entry point. Fellow Fool Matt Koppenheffer correctly cautioned Fools about buying into takeover rumors earlier this month, but with its stock once again flirting with 52-week lows, Walter is a tempting turnaround bet. Of course, with a beta of 2.2, expect the ride to be very bumpy.
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At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.
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