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 been benefiting from increased global demand for steel. It specializes in cokemaking, which is the process of heating coal to very high temperatures to produce a solid carbonaceous residue. Cokemaking is key in the production of steel. Since there is a tight supply of steel, SXC benefits.
While the company only has $55 million in cash as of the end of the most recent quarter, that still compares favorably to no short-term debt. Earnings have grown 82.4% over the past year and are expected to soar 344% year over year in the current quarter. This has led to a Growth Grade of A in our POWR Ratings system.
In addition, the stock looks undervalued with a forward P/E of only 11.26. SXC has shown mixed performance since February. This is evident in the chart below.
Take a look at the 1-year chart of SXC below with added notations:
SXC has formed a level of support at $6 (green) over the past several months. The stock has rallied off that $6 area a few times already, but now looks like it may be falling back down to that level again.
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If SXC were to break support, lower prices will likely follow from there. Therefore, if the stock were to break below the support, a short position could be entered.
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SXC shares were unchanged in premarket trading Tuesday. Year-to-date, SXC has gained 54.48%, versus a 26.26% 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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