CVR Partners, LP (NYSE:UAN)

CAPS Rating: 4 out of 5

Recs

5
Player Avatar LouPinella (< 20) Submitted: 7/8/2011 2:19:43 PM : Outperform Start Price: $15.51 UAN Score: -93.27

I love dividends, and this should be a really good one... of course, it's faded a bit from its initial and fantastic rate as more and more people clue in. Long term (5 years plus), this should be a big winner, even if the stock price remains flat. In the short to medium term, however, there are a few possible warning signs:
--Natural gas remains very cheap, powering the competition and their margins; I have no idea where this is headed, to be honest, but it doesn't seem likely to go up that fast.
--Ethanol subsidies and tariffs are on the chopping block, which could tamper U.S. farmers' enthusiasm for planting over the next few years.
--Lumpy dividends may discourage the more staid income investors from investing and bidding up the stock price. While it's nice to think everyone will keep piling on until the dividend is down to 5% or so (that'd be ~$38 a share!), I don't think that will happen.
Go long.

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