In today’s daily we have covered stock research on New Hope (NHC). We also provide you with 10 dividend stocks for 2014.

S&P 500 was up by 7.66 points or 0.41% to 1879.55 on Tuesday. S&P 500 rose for the sixth day capping its longest rally since September with healthcare stocks surging amid a bid forAllegran Inc. U.S. stocks rose on Tuesday as a host of solid earnings reports along with strength in the healthcare sector helped lift the S&P 500 to its sixth straight advance.

The participants in the market are still keeping an eye on developments in Ukraine. As per a Thomson Reuters survey 20% of the S&P 500 companies that have reported so far 63% have managed to beat forecasts. In Tokyo Nikkei 225 touched a six month low last week and has dropped more than 11 % so far this year.


S&P 500 Daily Chart   (Source – Thomson Reuters)
 
S&P ASX 200was up by 25.10 points or 0.46% on Tuesday and closed at 5479.30 points. Oil Search has advised the market that its production will be at the upper end of their guidance range of 13 – 16 Million barrels. Aggressive LNG expansion has also been outlined for the company. Paladin energy has been struggling with lower Uranium prices, which has offset increase in output.

Aurizonhas announced ownership interest of UBS which equates to 5.06% of the total voting power. The credit ratings agency Fitch announced thatCoca Cola Amatil’s (CCL) revised profit guidance won’t affect its credit rating. 


S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 



Stock of the Day – New Hope Corporation (NHC)
 
New Hope mines thermal coal primarily from Acland in Queensland. Group production of about 6 million tonnes a year is almost exclusively sold into the export market via a 100% owned port in Brisbane. Production expansion, from 6 million tonnes to 7.5 million tonnes, is likely to be delayed given cyclically high capital costs and lower coal prices. The balance sheet is immaculate with net cash sufficient to drive further investment in energy.
 
New hope’s first half fiscal 2014 profit of AUD 23 million was as expected. The majority of profit came from interest on the AUD 1.1 billion cash balance, with coal mine pretax earnings marginally better than breakeven. The result is symptomatic of the pressure the export thermal coal industry is under with many companies loss making.


Source - New Hope

New hope has a strong track record in managing costs, having held them steady since fiscal 2010. The company has a large inventory of undeveloped coal deposits. While the market is not interested in the value of development projects, it is highly likely that they will be valued in the future.


New Hope Daily Chart  (Source - Thomson Reuters)
 
The key catalyst will be an improvement in the coal price and the industry returns. The supply side cupboard is bare with virtually no incentive to build new mines but it will take at least a year for the excess supply situation to resolve. We believe the stock is overvalued at its current price and would review the stock at a later date.

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