Will tax cuts ignite these rallying Australian coal stocks?


By Ben Levine for Kapitall.

The Australian government repealed a law  on Thursday that heavily taxed large companies for their carbon emissions. 

Critics of the reversal are saying that this makes Australia the first nation to backtrack on carbon legislation , which is bad news for the environment considering Australia has long been one of the world's top emitters of atmospheric carbon dioxide per capita.

Surprisingly, this comes at a time when the United States has started to put greater pressure on coal producers to pollute less. The EPA proposed a new plan in June that would limit carbon emissions from power plants by 30%.

In order to comply, power plants would likely have to trim usage of their dirtiest fossil fuel: coal. As we argued in June , big American coal companies like Peabody Energy Corporation ( BTU ) , Arch Coal Inc ( ACI ) , Alpha Natural Resources ( ANR ) and Cloud Peak Energy ( CLD ) could all take a hit.

In both countries burning coal is responsible for a very high proportion of carbon emissions. With both nations changing relevant carbon legislation at the same time, you could see a pretty big disruption take place around their respective coal industries-and positive momentum around Australian coal stocks.

With reduced carbon restrictions, Australian companies have fewer incentives to shy away from burning coal, and the opposite is now true in the US. This means that in coming months, Australian coal companies could have a strong competitive advantage.

With that in mind, we took a look at the top Australian coal mining and processing companies trading on US exchanges and screened to see which  were rallying above their 20-day, 50-day, and 200-day simple moving averages ( SMA )

This indicates strong upward momentum for the stock. Do you think the good days will continue for Australian miners? Use the list below to begin your analysis. 

Click on the interactive chart to view data over time. 

1. BHP Billiton Ltd. ( BHP , Earnings , Analysts , Financials ): Operates as a diversified natural resources company worldwide. Market cap at $187.88B, most recent closing price at $72.07. 

SMA 20: 2.88%

SMA 50: 3.96%

SMA 200: 6.52%

2. Rio Tinto plc ( RIO , Earnings , Analysts , Financials ): Engages in finding, mining, and processing mineral resources. Market cap at $105.85B, most recent closing price at $56.51. 

SMA 20: 2.21%

SMA 50: 3.89%

SMA 200: 5.77%

(List compiled by Ben Levine. Monthly returns sourced from Zacks Investment Research, all other data sourced from Finviz.)

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: SMA



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