EPD. Spekulatius, for a different way to play the E&P's, I'm looking at limited partnership EPD (mentioned by EKS as being in Tortoise fund). Stock prices of limited partnerships have risen of course, and distribution yields have fallen even as distributions may have increased. EPD yields 6.2% per Yahoo.
Tiernan Ray in Barron's today wrote:
"Overall, the easy money for the moment may have been had (edit: referring to energy MLPs), given that money has been flooding into the sector, with 12% and 25% increase in dollar volume in Q2 and now in Q3, respectively. The money’s been chasing MLPs because of low rates (versus high cash flow yields for MLPs) and because MLP distributions are taxed at ordinary income rates, unlike stock dividends.
But weak GDP expectations could keep cash flow growth at the MLPs “muted” in coming months, in general. Longer term, Durbin is still favorably disposed toward MLPs, as the dividend tax issue should continue to push some investors into the MLPs. Moreover, if the Bush tax cuts “sunset” this year, it could add 12 percentage points to MLPs’ relative returns, he believes...
At the same time, Durbin (edit: Goldman Sachs analyst Theodore Durbin) raised price targets across the board, with his “Buy”-rated picks Sunoco Logistics (SXL) rising to an $87 price target from $80, and Enterprise Products Partners (EPD) rising to a $41 target from $38.
But Durbin’s strongest pick of the bunch is actually diversified pipeline operator Spectra Energy (SE)."
In looking at these companies in library articles, I found that one analyst said about SXL: it has the "highest quality from a price performance measurement". Again, here too, I shake my head, not understanding what his statement means. -g- (And SXL appears too expensive for me anyway.)
About EPD it was written, it's in a lot of "developing energy areas". I looked, and I like what I see. Apparently as a midstream energy mlp, its goal is to earn fees at every link of the value chain. It's in three areas where there's E&P activity: Haynesville, Barnett, and Eagle Ford (I like Eagle Ford!). So EPD should profit whoever explores and produces in these developing areas. I'm considering EPD as a conservative buy and hold. |
