Money and Investing Thoughts

Inergy, L.P. | Investor Relations | Press Release

Last week Inergy, L.P. (NRGY: 18.00 0.00 0.00%) declared their 29th consecutive distribution increase and now they are backing that up with a nice earnings report. NRGY is one energy related company where low energy prices can provide a benefit to the bottom line.

NRGY is primarily a retail propane provider with a growing midstream natural gas business. The retail propane side benefited from lower prices as their customers were less concerned about conservation during the cold last quarter of 2008. As a result, gross propane profits increased by $35.5 million to $152.7 million. Currently propane operations account for about 80% of revenues.

As a result of the strong quarter (Q1 for fiscal 2009) the company’s management increased their outlook for the year’s EBITDA by about 10%. Continued growth of the distribution seems to be pretty secure.

For the income investor, NRGY looks like a secure place for a growing income stream. The shares are still sporting a yield of almost 11%. I think this company should yield closer to 8%, giving a share price potential of $32.

Note: NRGY is a component of this site’s hypothetical Income Portfolio.

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As part of the preparation for the new blog on shipping stocks I will be starting soon I have been checking into the recent performance of this sector by subsector. The results have been interesting.

Right now I have a universe of 42 U.S. listed shipping stocks. All of the tracking is on an equal dollar weighted basis. I have divided these stocks into several sectors, some are obvious, some are not and some have overlapping component stocks. Through the time I am writing this early Friday afternoon here are the returns (share price only) YTD for the sectors:

• All shipping stocks: +5.92%
• Dividend paying shipping stocks: +7.23%
• Tanker stocks: +8.62%
• Dry bulk carrier stocks: -2.75%
• Container and mixed fleet stocks: +13.62%
• Shipping stocks with suspended dividends: -6.19%

As you can see there are some interesting results when you break down the sector. Those of you that know the sector well probably understand the correlation between the two subsectors with negative returns.

The purpose of my new website is to provide current new, analysis and discussion on the stocks in this sector. Right now I am taking RSS and email subscriptions to build up the readership for the launch. Hop on over to www.shippingstocksblog.com and sign up so you do not miss a thing when the blog kicks off.

tlas Pipeline Partners | Investor Relations : News Release.

Atlas Pipeline Partners (APL: 36.94 0.00 0.00%) has announced a 4th quarter distribution of 38¢ per share, down significantly from the 96¢ of the previous quarter. This borders on good news as the market has been pricing APL like it would not be able to pay any distribution or even stay solvent. The market liked the announcement, adding 17% to APL’s value on Wednesday. The new payout rate still give the stock a 20% yield.

Shareholders of the traded general partner, Atlas Pipeline Holdings (AHD: 0.00 N/A N/A) did not fare as well. The distribution for AHD was reduced from the previous 51¢ to just 6¢. General partner LP’s are a leveraged bet on continued distribution increases of production LP’s. As you can see a distribution reduction is not a happy occurance for the GP.

From the press release it appears that APL was able to reduce their debt load by something like $80 million. Total debt is in the neighborhood of $1.5 billion, so they have a long way to go. Probably the most encouraging note in the release was this line:

We are hopeful that NGL prices (up approximately 50% from December 2008) will continue to recover, and that our unitholders may receive the benefit from such recovery.”

A significant portion of Atlas Pipeline’s revenues are generated from the sales of NGL, so this is a good sign. My last post concerning APL discussed considering the stock as a call option on increasing energy prices while collecting any distributions that come along, I believe the theory still holds.

Note: APL is a component of this site’s hypothetical Income Portfolio.

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Atlas Energy Resources – News and Press Releases.

Atlas Energy Resources (ATN: 0.00 N/A N/A) has announced the 4th quarter distribution will be 61¢ for shareholders of record on February 9, 2009. The distribution is the same amount as the previous two quarters. Even after today’s price bump the stock is still sporting a yield near 17%.

ATN is well hedged through the rest of 2009 and into early 2010. They are  positioned to continue to grow their well numbers and production even at the current low natural gas prices. If past practices hold they should release year end result in a couple of weeks.

ATN is a component of this site’s hypothetical Opportunities Portfolio and a personal holding.

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Inergy, L.P. | Investor Relations | Press Release.

Inergy LP (NRGY: 18.00 0.00 0.00%) a propane distributor and natural gas midstream operator has announce their 4th quarter dividend of 64.5¢. This is a penny more than the 3rd quarter payout and 6.6% higher than the distribution of a year earlier. As I noted in the headline this is the 29th consecutive dividend increase for Inergy.

Inergy has grown their business through acquisition of local propane distributors and some creative growth in their midstream business. For example, in 2008 they acquired a salt production company that will allow them to use the salt caverns to store billions of cubic feet of natural gas.

The cold winter should bode well for propane sales. The current lower prices for propane will make the customers less afraid of their energy bill as they heat their homes to fight the cold. The majority of Inergy’s propane business is to retail customers. This allows them to maintain their margins no matter what the level of energy prices.

The new dividend rate give NRGY a yield of over 11%. It is hard to believe that during the market lows in November this stock had a yield of over 20%. Kudos to any investors who picked up some share at that time.

Notes: NRGY is a component of this site’s Income Portfolio. If you are interested in income stocks, do not miss my post on shipping stocks.

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