SunCoke Energy Inc. (SXC) operates as an independent producer of coke in the Americas. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing-based customers.
The company has benefited from an increased global demand for steel. SXC specializes in cokemaking, which is the process of heating coal to very high temperatures to produce a solid carbonaceous residue. Cokemaking is key in producing steel and since there is tight supply, prices remain elevated.
The firm has a current ratio of 1.6, which means that it has more than enough liquidity to handle short-term obligations. This has led to a Quality Grade of B in our POWR Ratings system. While its EBITDA is down 13% over the past year, it is expected to rise 20% over the next year.
The stock looks undervalued with a forward P/E of 12.87. SXC has shown mixed performance since March of this year. This is evident in the chart below.
Take a look at the 1-year chart of SXC below with added notations:
A major level of support has emerged in SXC the $6 (green) mark over the past several months. The stock has rallied off that $6 level again. If SXC were to turn back down, and the support were to break, lower prices will likely follow.
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Therefore, if the stock were to break below the support level, a short position could be entered with a protective stop placed above it.
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SXC shares rose $0.05 (+0.75%) in premarket trading Friday. Year-to-date, SXC has gained 58.25%, versus a 18.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.
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