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:
Chart of SXC provided by TradingView
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.
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. More...
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