Traveling through hyperspace ain't like dusting crops, boy.
Has there ever been a dude who frequently shows up when you and your friends hang out, yet no one likes him? He never gets the subtle hints that he's unwelcome, yet you and your friends are too polite to straight-up explain to him that everyone thinks he's a total d-bag. This happened to me once, the guy must have been a friend of a friend because nobody seemed to like him. Behind his back we used to call him "Dorothy Downer" because he had a negative attitude about everything all the time. Anyway, one time my friends and I had just finished a huge project. We were really psyched because this project was totally unique and we thought it had the potential to be a real game changer. While we were congratulating our selves and talking up how awesome this technology we created was, in walked "Dorothy Downer". Upon seeing us all patting each other on the back, Dorothy said something to the effect of:
"Don't be too proud of this technological terror you've constructed"
What a buzz kill. And when one of my friends tried to tell old Dor'th (we sometimes called him "old Dor'th" for short) to stuff it, "Dorothy Downer" started to choke him. Seriously, who chokes people?
Despite Dorothy's negativity, we tested the project and it was a huge success and we received a lot of publicity as a result.
I was recently reminded about that feeling we had before Dorothy Downer killed the mood: knowing that we had a unique piece of technology that would give us the edge against our competition. What reminded me was the state-of-the-art process of creating urea ammonium nitrate from petroleum coke as opposed to doing so using natural gas. Petroleum coke is the solid, dry byproduct of refining oil and currently only one company in North America uses it to make their nitrogen fertilizer.
My stock pick for this week is CVR Partners (NYSE:UAN) at roughly $23.00 / share.
In April of this year, CVR Partners was spun off of CVR Energy (NYSE:CVI) - an oil refiner, which is where CVR Partners gets all their cheap petroleum coke. The facility that produces the ammonia and urea ammonium nitrate (UAN) fertilizers is located in Coffeeville, Kansas – not far from their customers: North American farmers. The company is currently working on a plant expansion that will increase production by 50% in 2013.
CVR partners is a Master Limited Partnership, so they're legally obligated to say things like "unit holder" and "distributions" when they're talking about "shareholders" and "dividends". But more importantly, to qualify for their special tax treatment, they have to pass most of their income on to unit holders. I'd buy CVR Partners just for their commitment to growth, the proximity to their customers and their massive cash distributions – but with a buy-and-hold strategy, I'm curious to see what happens when their competition has to raise fertilizer prices if natural gas were to get more expensive.
I'll leave you with the ending of my story: I suppose old Dor'th eventually got the message that we didn't enjoy his company because he stopped hanging around us. As for our project, unfortunately some jealous vandals smashed it up. This is why we can never have nice things.
"I should disclose that I own some UAN and I plan to buy more very soon."