Dennis Gartman Is Bullish On Coal Stocks
Dennis Gartman said on CNBC's Fast Money that he is a buyer of the coal stocks.
He explained that this is a contrarian trade, very similar to the one he made a year ago, when he decided to buy the aluminum stocks. At the time he started buying these stocks, the decision was ridiculed by many traders, but since then the group has been performing well.
Coal is used to supply 41 percent of electricity production in the United States and 43 percent of the world's electricity production. If you add to that a global economic growth, which is going to happen in Gartman's opinion, coal looks as one of the cheapest entities today.
Some of the coal companies are going to go bankrupt because of the EPA's new carbon monoxide plan, added Gartman, but he thinks the plan will not be so drastic because of the percentage of electricity production powered on coal. The coal stocks are trading 90 percent to 95 percent lower from their highs and haven't made a new low for a long period of time despite extremely bearish news. This is a good enough reason to buy, concluded Gartman.
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