Shares of International Coal, the West Virginia-based coal miner, gained 1.1% today after Barron's ran a bullish piece on the company in a ''Sizing Up Small Caps'' feature in the magazine's most recent issue. International Coal's small market cap of just over $2 billion as of Monday's close makes the company a possible acquisition target, Barron's reported.
International Coal (ICO) could command up to $14 in a takeover, which would be above the stock's 2008 high of $13.28, Barron's reported citing analysts. Even if a takeover does not materialize, ''International Coal's shares still could advance more than 25% in the next 12 months, if higher coal prices and increased production drive an expected double-digit uptick in 2011 earnings,'' according to the magazine.
The coal sector has been hot recently in terms of M&A talk. Alpha Natural Resources (ANR), the third-largest U.S. coal producer, recently announced it would acquire Massey Energy (MEE), the largest coal producer in Central Appalachia.
International Coal is looking to increase its exposure to metallurgical coal, the grade of coal that is highly prized by Chinese and Indian steelmakers, which could serve to make the company an even more alluring acquisition target. ''Four years ago, International Coal produced less than one million tons of met coal. Today it produces three million, which will rise to more than five million in three years,'' according to Barron's.