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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (43200)	7/5/2011 11:34:30 PM
From: Spekulatius	Respond to of 78719

re SEP , in my opinion SEP with a 5.8% yield is too expensive. i don't think it's trading really at 26x EBITDA/EV though, but probably in the mid teens. 8X EBITDA is not a cutoff, its a good price for a pipeline asset (at least for long life backbone pipes). The only pipeline stock that is reasonably valued (although not cheap) is BWP with a 7.2% yield. Although keep in mind that the large pipes are a regulated business (regulated by FERC). They can make a decent but not great return and the yearly tariff adjustments are indexed to inflation , plus a small bonus (up to 2% I believe).The smaller pipes (gathering assets) are typically unregulated, have a shorter lifespan and command hence lower multiples.