Two MLPs with great stories that should cause their shares to outperform
I know that I said that I would talk more about my recent real money moves, but I'm about to go out to dinner and am short on time, so I thought that I'd share these two interesting stocks tat I just found in Barron's instead. Both of them are great because they don't just have high yields or dividend growth because that's what the analysts are forecasting. They have real stories that should cause their shares to rise significantly over the next couple if years. I love "story" stocks that have catalysts. I just added them both to my CAPS portfolio. Here's my quick pitches:
ONEOK Partners, L.P. (NYSE:OKS)
I'm a big fan of companies with below-average distributions or dividend yields that will likely increase significantly in the near future. That's exactly what we have in OKS.
While its current yield of 4.7% is a little below average compared to its competitors, the company has $7 Billion worth of expansion projects scheduled to come online over the next year or two. That's a lot of growth that will likely translate into a significant increase in its distribution and hopefully in turn its share price.
Targa Resources Partners LP (NYSE:NGLS)
Targa is another interesting MLP that was featured in Barron's recent cover story on the sector. What I like about this company again is there is a story as to why its shares should rise in the future.
The story with Targa is that it is reshaping its business model towards one that is less exposed to commodity prices. Today around half of the Company's business is exposed to commodity pricing. It has a slew if new projects that are scheduled to come online by 2014, which will reduce its exposure to commodity prices to around 35%. Once the market recognizes this shift in mix to more sable business the company will likely be awarded with a higher multiple, causing its shares to rise and me who priced it in CAPS to be happy :).
oh and here's a bonus pick that I just remembered I made yesterday:
WPX Energy, Inc. (NYSE:WPX)
Barron's recently published an interesting article about how the former Williams (WMB) spinoff WPX Energy will be able to return to profitability even without an increase in the price of natural gas by renegotiating terrible legacy mid-stream contracts that it was saddled with over the next two years. That's just the sort of story catalyst that I like to see.
Any increase in the price of natural gas, which I'm certainly not counting on would be gravy. So would the sale of the company's Argentina assets (yuck).
Have a great Saturday night everyone!