AGL Resources Inc. (AGL)
Picked up some AGL on the close to add to my other shares (I will avg up from my previous buys). AGL was trading a bit funny the last two secession since it is going to be added to the S&P 500. Their Forward PE is still quite attractive at 12.7 when compared to their peers at 15.
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UGI Corp. (UGI)
Was also looking at UGI as it was getting close to my earlier sales price @ $27.30/share (7/14/2010). This was one I wanted to get back into as their Forward PE is now close to 10.
The article below discusses UGI's uncertain growth prospects when looking at their margins: Gross, Operating & Net when compared to competitors. The bottom line is UGI is not that efficient.
Here's How UGI May Be Failing You
fool.com
This can be seen as a net positive for the company if management can make the appropriate future capital investments to expand their current margins. They just may be in the middle of accomplishing this through recent 2011 investments that should BOTH expand production and open up new (foreign) distribution channels..
From their 2011 annual report Letter to Shareholders:
( 2011 Annual Report: files.shareholder.com )
• In 2011, our Midstream and Marketing team announced a series of investments in the Marcellus Shale region. These investments included the upgrade and expansion of a gathering system in northeast Pennsylvania that will deliver Marcellus gas to the Tennessee pipeline and a new $150 million pipeline
project that will extend that existing system 30 miles south to connect with the Transco pipeline. We also conducted the first request for proposal for our 15 BCF gas storage facility in central Pennsylvania, which resulted in 100% of that capacity being committed at attractive rates. We made great progress during
2011 turning our Marcellus aspirations into a reality.
• We announced and closed the acquisition of Shell’s propane operations in eight European countries covering the Benelux and Nordic regions as well as the United Kingdom. This acquisition provides us with strong positions in several new markets adjacent to our existing operations, and strengthens our European business through the addition of a talented team from Shell. With this most recent acquisition, our European propane business now operates in 16 countries, delivering more than 700 million gallons of propane annually.
• In October, we announced our intention to acquire Energy Transfer Partners’ propane distribution businesses, Heritage Operating, L.P. and Titan Energy Partners, L.P. This transaction represents an exceptional opportunity to expand the reach and scope of our U.S. propane operations, and to bring the
high caliber teams from Heritage and Titan together with the AmeriGas team. We expect that this acquisition will close by March 31, 2012.
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Therefore, UGI is now back on my add list on any price below $28.00/share. The company looks like they are in a position to take cheap Marcellus Shale NG and get it into new distribution channels expanding their overall capacity. Let's just hope they can also expand their net margins in the process.
EKS |
