FCL Update

FCL Reports Rock-Solid Numbers

By Bryan Bottarelli
Wednesday, April 26, 2006 9:48 AM EST
Wed, 26 Apr 2006 14:48:00 GMT

Dear Bottarelli Research Member,

It looks like the news out of Foundation Coal (FCL – NYSE) was just what we expected. This morning, the company reported 66% rise in first-quarter profit, as net income rose from $18.9 million ($0.41 a share) to $31.3 million ($0.67 a share). That’s a full $0.17 better than the Reuters Estimates consensus of $0.50!

For the fiscal year 2006, the company expects earnings per share between $1.50 and $2.15 versus the consensus of $2.03. All told, it was a very strong report.

On the news, FCL stock has opened lower by $1.98, which looks like a classic case of “selling on the news.” On an earnings report like that, I’m shocked the stock isn’t posting an explosive rally. Moments later, FCL trimmed that $1.98 opening loss to under $1.00, so perhaps the bulls will use this dip as a gift and buy up the stock. Either way, the FCL May 50 Calls (FCL EJ) you entered for $3.50 now trade between $2.80 and $3.00. Maintain your stops and continue to hold. I think the morning selling pressure is unwarranted, and we may get an afternoon pop after all.

In other news, the PDS May 35 Calls (PDS EG) that you took profits on yesterday continue to move higher. PDS opened the day up $2.00, which hit a new 52-week high of $38.20. The May 35 calls you entered for $1.35 traded as high as $3.10, so if you haven’t already sold them, do it now!

Lock and load,

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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