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Sterne Agee analysts said coal demand has dropped drastically this year and as a result coal stocks have fallen sharply.
But despite current conditions analysts have published a note saying the sector is "oversold" according to a recent Baron's article.
Commenting on The Paragon Report, produced by Paragon financial Limited, Sterne Agee analyst Michael Dudas wrote in a note to investors: "Despite an accelerated risk-off trade, recent data are encouraging. Shares appear under-priced and reflect a much more onerous thermal and met-coal pricing scenario.
"Certainly, the equity selloff has been non-discriminatory for the most part, not fully reflecting quality, liquidity and product mix differentials.”
He has recently recommended clients to increase holdings of Alpha Natural Resources, Peabody Energy, Consol Energy and James River Coal.
