Don’t Fight the Trend: Walter Energy Edition.
Back in the spring of 2011, life was good for Walter Energy investors. Stocks were two years into a bull market, and $WLT was trading at all-time highs north of $140 share. Since then, the economy has continued to improve. And energy – thanks to alternative upstarts like Tesla $TSLA and Plug Power $PLUG – has become sexy again.
So why has Walter Energy gotten killed and what prompted Bank of America to issue a $2 price target? Yes, that’s a two dollar price target!!
Ticker $WLT is the top-trending ticker on StockTwits this morning as investors attempting to make sense of the carnage awoke to news of a “high yield” bond offering…
— LCD News (@lcdnews) Mar. 20 at 07:01 AM
…which resulted in further share price erosion heaped upon an already bleak YTD performance and gag-reflex-inducing slide from 2011’s highs.
— Paul (@TradingPlays) Mar. 20 at 06:58 AM
In an era of essentially free interest rates, Ricster here states the obvious:
$WLT 11% interest rate is a disaster for any company.. Crushes any hope of making a profit
— Mr Ricster (@ricster3) Mar. 20 at 07:58 AM
Meanwhile, you don’t need to be an expert in corporate finance or be a balance sheet whiz to know an investment in $WLT has been a bad idea. Sometimes it’s a simple as following price:
Stocks making new 52-week lows in a bull market are usually there for a good reason. Do urself a favor and stay away from them. $WLT
— Ivaylo Ivanhoff (@ivanhoff) Mar. 20 at 07:39 AM
Let the market speak to you. Let prices tell the story. Sometimes, that’s all you need. The details will emerge, but by then you’ll be too late.
~ Sean McLaughlin (@chicagosean)
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