+ Watch ARLP
on My Watchlist
The Company is a producer and marketer of coal to major United States utilities and industrial users.
Bought this in one of my investment clubs, so it is a real-life holding of mine.Sales have increased at an annual compound rate of 12% since 2007. EPS has increased at an annual compound rate of about 15% since 2004, (with a lot of fluctuations over the years). The pretax profit margin has been over 17% for the past couple of years, and was more than that on the previous two. Not too bad for a commodity company. The earned-on-equity has been falling over the past three years though, so this is something to keep an eye on. The debt-to-equity is very high, at around 200% DTE, so this is something I wish would fall.The current P/E is well above historic norms, though is pretty low with a P/E around 6. they have raised the dividend in each of the past 5 years, and paid a 15.6% dividend last year, so the dividend is great, (which is why I proposed this company and the club bought it). With a payout ratio of about 62% last year, there is still a pretty safe margin there, so the dividend should be quite safe, and the company could continue to raise it. The PEG ratio is quite low, sitting around 0.4.I am hoping that this stock could reach as high as $84 in the next 5 years. That would be 13% annual growth rate in the stock price. Throw in a 14% dividend yield, and the stock could return over 27% on an annual basis. That is what I am hoping for anyway. We'll have to see how the stock actually performs to see if I can meet my goal. But even if I just get the 14% dividend yield alone, it would still be a worthwhile investment to me.
Best earnings in the industry, and strong dividends.
This was a screener pick
Long Term Hold:Great underlying fundamentals:Div yield: 6%p/e 10.585yr eps growth: 25%5yr div growth: 12%5yr rev growth: 15%div/EPS = 64.3%meaning 64% of earnings goes back to the shareholders.
A first time pick of mine, I have been holding this big div at big losses to the sector. Paid $1.175 today.Div. (Yield) $4.70 (6.2%)Current yield %6.79
I don't think they'll beat the market, but I still feel that they're a good investment for a time frame of 5+ years.
Solid earnings, Conservative payout, dividend increased every quarter for years...yield circa 7% depending on market wrinkles over many years...A Gold Mine Coal Miner.
ARLP is the ninth largest coal producer in the United States and they have management in place who know how to make smart acquisitions. Earlier this year they made a deal with Green River Collieries to purchase all of their coal related assets in western Kentucky. The purchase includes the Onton 9 mining complex, which produces 2.1 million tons of coal annual and has estimated reserves of 40 millions tons.(http://www.miningnewstoday.net/2012/02/alliance-resource-partners-lp-announces.html#.ULCOgOR3gZk)Currently the price of coal in the Illinois basin (which includes parts of western Kentucky for some reason) is 47.90 per ton (http://www.eia.gov/coal/news_markets/index.cfm)Assuming an incredibly conservative price of 40 dollars for the coal over the life of the mine, ARLP would generate 840 million in revenue each year. Apply their ..176 5 yr avg profit margin and that gives them 14.7 million in profit. If you believe the 40 million ton estimate then the mine can operate for 15-20 years. So with very conservative estimates on the price of Illinois coal you get 14.7 million in profit each year for the next 15-20 years. And how much did our pals at ARLP pay for this opportunity? A measly 100 millions dollars. (http://www.sec.gov/Archives/edgar/data/1086600/000110465912075780/a12-22453_110q.htm#Item5_OtherInformation_090043) Page 7 "4. Acquisition of Business"
Achieved Capital Gain of 31.8%. Return of Capital (ROC equivalent yield) 6.8%. ROC-Yield on Cost (YOC) 9.1%. This is not a stock, it is a Master Limited Partnership (MLP). Sold position in IRA to avoid possible double taxation from recapture of depreciation (unrelated business income tax - UBIT) when I am retired. See Ken Reel articles on Seeking Alpha for IRS Form 990T reporting of UBIT on MLP's held in IRA’s. Reinvested proceeds in other dividend growth stocks that are listed on my MF score card. Still hold position in Brokerage account and reinvesting ROC. Capital Gain displayed is shown as 31.1%.
The stock is low now
Gamble on coal. I can't really speak for how coal is going to do as a sector -- certainly it's been free falling the last six months. However, ARLP is offering a steadily increasing dividend which is now yielding 7%. Income has been rising, and the payout ratio is < 50%. The balance sheet looks clean: more cash than total current liabilities, and the current ratio > 2. If the sector does recover, ARLP should reap serious benefits. Meanwhile, the yield should provide downward cover in the near term.
high sulfur coal is taking share from other forms of coal. ARLP is almost all high sulfur coal from the Illinois basin,which is the cheapest coal to mine.
Good fundamentals. Great dividend. They increase the payout every quarter.Coal won't be going away anytime soon
ARLP faces some headwinds with regard to political and ecological issues. However, I think it has fallen too far, too fast. It may have a ways to go down yet, but assuming there is no threat to the dividend, it almost has to go back up from current levels.
Keeping an eye on it...
new regulations for coal burning on the way
Great yield and good fundamentals.
I used to own this when it was $40 then sold out of boredom. Oops! Buying in again at $71 and holding until they stop raising dividends or 50 years, whichever comes first. What a great dividend payer. These dividends have got to cause share price appreciation.
Outstanding company in the coal industry. Increases its dividend every quarter, 13% revenue growth, 20% earnings growth, 13% dividend growth, can't get better than that. Payouts are more than covered by free cash flow so you are not getting part of the assets back like with other partnerships.
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