Dykstra: NuStar Energy Is Shining Brightly

When I first started trading in 2003, the market was emerging from a long bear run, and I focused much of my trading attention on energy stocks. I continue to follow the sector closely, which I'm sure has been noticed by consistent followers of the column.

I like this sector because in spite of all the instability in oil-wealthy regions, oil-related companies have performed consistently well. Today, I would like to take a look at NuStar Energy (NS Quote), formerly part of Valero Energy (VLO Quote). The company operates refined product terminals, refined product pipelines, crude oil pipelines and crude oil storage. NuStar closed Monday at $60.44.

The company provides some of the key infrastructure for oil refineries to bring their refined product to consumers. Without any immediate alternative, Americans will continue to consume large quantities of oil. As much as this may hurt the environment, it's simply a reality of the times.

Additionally, as a limited partnership, NuStar benefits from a more lenient tax structure and pays its shareholders an excellent 6.6% dividend. A dividend of that magnitude attracts investors in any market condition. The shareholder value in this stock makes for a great deep-in-the-money play in the face of a tumultuous macreconomy.

To capitalize on this, I will place a limit order for 10 contracts of the March $55 calls (NSCK) for $5.50 or better.

The Game of Life

These days, most students will go on to graduate school after college. Whether it's a medical degree, a law degree, a master's degree, or a Ph.D., more and more people prolong their formal education, thereby making the "average" Joe far less average.