Hot Stocks Report From Ticker Tape Digest

Ticker Tape Digest  presents the "Hottest stocks" in the market. The tendency for the strong to get stronger is often a playable theme. Looking for a good entry point on these hot stocks is important. Also, one must do research to weed out special situations that are not playable.TTD's charts contain daily price action and our proprietary tick volume study. The Tick volume study is shown in the top part of the chart. A high positive reading indicates accumulation or buying. A negative reading shows heavy selling or distribution. The tick volume is neutral at zero.

Peabody Energy Corp. (BTU) - 50.93, up 1.92 - Breakpoint 49.23

Profits to Rise Sharply This Year and Next, TTD Targets 62

  October 1, 2010 - BTU, based in St. Louis, produces coal. Annual revenues: $6.4 billion. BTU's stock breaks out today from a nine-week, cup-and-handle base with a good expansion in volume. The stock is close to making a 52-week high. If it does BTU could attract more buying. So far today, BTU is trading 6 million shares, almost double its average daily volume of 3.6 million shares.

  TTD highlighted BTU as a breakout at our midsession show on the Web Friday.

  BTU's 10-minute chart shows the stock advancing strongly in the morning and clearing its breakpoint easily.

  The stock continued to act strong in the afternoon. It looks like it will close near its high for the day. That would be bullish.

  TTD's clip of the tape shows the recent big block trades.

    There was a big block of 514,881 shares that traded late on Thursday on a down tick to $48.96.

  However, today, the key block trades ticked higher which shows good institutional buying interest.

  The key trade came when 27,511 share block traded at $49.71. That was up sharply from the prior block at $48.96.

 BTU owns a majority interests in 28 coal mines in the U.S. and Australia.

 In addition to its mining operations, it markets, brokers and trades coal.

  The company’s three mining segments are Western U.S. Mining, Midwestern U.S. Mining and Australian Mining.

  BTU's 12-month price performance chart shows the stock appreciating 42% versus a 12% gain for the S&P 500 index.

  BTU's long-term chart shows the stock with two strong waves higher. The first was from 2004 to 2006 and then from 2006 to 2008. The stock then went into a severe bear market. It tumbled to 18. However, BTU now looks to be on the comeback trail.

  BTU's daily chart shows the stock climbing from 36 to 46. It then set up its base. The push higher today also surpasses upside resistance going back several months.

  The stock's TTD momentum indicator (top of chart) is modestly bullish.

  The stock's accumulation - distribution line (bottom of chart) is in a strong up trend now and is indicating that there is strong buying taking place in BTU.

  BTU is poised to show big earnings gains this year and next.

  Net for this year should climb 59% to $3.06 a share from $1.92 a year ago. The stock sells with a price-earnings ratio of  16. TTD sees that as low consider the projected earnings growth rate.

  Next year, analysts look for a 49% gain in net to $4.47 a share from the anticipated $3.06 this year.

 BTU is set to show a significant acceleration in quarterly earnings growth. Net for the third quarter should increase 85% and then in the fourth quarter 114%.

  That could be a key driver to send the stock higher. Net for the third quarter should come in at 93 cents a share, up from 49 cents a year ago. The highest estimate on the Street is at $1,11 a share. TTD sees good chances for at leas a modest upside earnings surprise. The company topped the consensus estimate the past four quarters by 5 to 26 cents a share.

  Strategy Opinion: TTD is very bullish on BTY. We look for the stock to climb to 62 within the next few months. A protective stop can be placed near 47 giving it some room. TTD rates BTY a very good intermediate-term play provided earrings meet expectations.

  Sponsorship: Excellent. The largest fund holder is 5-star rated Vanguard Prime-cap Fund with a 2.2% stake. Also, 5-star rated Vanguard Energy Fund has a 1.4$ stake. A key buyer recently was Eaton Vance Large Cap Value Fund,  3-star rated, which purchased 1.9 million shares recently. BTY has 269 million shares outstanding.

  Insider Activity:  Neutral. Insiders were buyers recently using stock options. They turned around and sold. The latest selling was at $49.50. Right now, 22 analysts follow the stock, 19 have a buy, up from 18 three months ago.

Stock Performance Chart with Quarterly Earnings Markers.

(copyright: Ticker Tape Digest 2010)