Jensen: Two High-Yielding Energy Plays
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As regular readers of this column know, I depend on energy master limited partnerships for a good portion of my income portfolio. I particularly like entities participating in the impressive expansion of the domestic production, storage and distribution of gas and oil. I continue to believe we are in the early innings of a secular expansion that the Independent Energy Agency (IEA) says will have the U.S. energy independent by 2030.
- NuStar yields more than 8% and has doubled its distribution payouts over the past seven years.
- Insiders have bought more than $4 million worth of shares in the last two weeks.
- The eight analysts covering NSH have a median price target of $31.50 a share, decent capital appreciation potential on top of an 8% yield.
- NuStar Energy (NS) recently agreed to buy key energy assets from TexStar Midstream Services LP for $425 million. This will increase the company's exposure to the fast-growing Eagle Ford shale region, which bodes well for future revenue and cash-flow growth. (NSH has a general- and limited-partner interest in NS.)
- Although the company came public less than 18 months, it has been a consistent payer of distributions and currently yields 9%.
- Insiders have been frequent and consistent buyers of GSJK over the past few months.
- Consensus earnings estimates for both 2012 and 2013 have moved higher over the past two months.
- The company has easily beaten earnings estimates the last two quarters, and analysts project revenue will grow between 7% and 10% in 2012 and 2013.
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