Global Partners LP (NYSE:GLP)

CAPS Rating: 5 out of 5

The Company is a wholesale distributors of gasoline, distillates and residual oil to wholesalers, retailers and commercial customers in the Northeast.

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Player Avatar sportscliche (99.63) Submitted: 1/3/2007 7:27:00 PM : Outperform Start Price: $12.02 GLP Score: +206.37

GLP is one of my favorite MLPs. It may combine the best of both worlds: distribution growth and high yield. Lehman is the only analyst house that covers it (as far as I'm aware) and they are looking at 5-year distribution growth of 7--7.5%. Current coverage is an ultra-healthy 1.7 x. This is a small cap partnership with IDR split to the general partner still in the 2% tier. That's good because it lowers the cost of capital for accretive spending projects and -- all things being equal -- makes GLP more competitive. That will change, of course, as the distribution grows; the GP will be highly motivated to do so with the current split so low. As recently as November 2006, it was paying out at a whopping 8% distribution. The market has recognized value and bid the price up in the last couple of months, dropping the yield accordingly. I suspect it is still off the radar screens of many MLP investors.

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