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Inergy, L.P. Message Board

  • abter1 abter1 Aug 2, 2005 1:26 PM Flag

    AG Edwards coverage on NRGP

    AGE initiated coverage today on NRGP (they already covered NRGY) with a Buy/Aggressive rating. Here is their summary of this decision:

    "Initiating Coverage with a Buy Rating for Aggressive Investors
    Investment Premise
    Inergy Holdings, L.P. (NRGP) is a partnership whose assets consist of common units, subordinated units, special units, the controlling general partnership (GP) interest and the GP�s incentive distribution rights of the Inergy, L.P. (NRGY-Buy/Aggressive). NRGP is a �leveraged� way to participate in the growth of NRGY. NRGP�s most important equity asset is the incentive distribution rights, which currently entitle it to 50% of the incremental cash flow available to raise NRGY�s distribution. Our Buy rating for investors with an Aggressive risk orientation is based on the following:
    " The incentive distribution rights could drive distribution growth at NRGP by three to four times the rate of growth at NRGY.
    " Distribution increases at NRGP could approximate 50% by fiscal 2008 based solely on the Stagecoach (natural gas storage) acquisition that is expected to close in August 2005.
    " The fiscal 2006 (Sept.) distribution is estimated to total $1.13 per unit, up 26% from the current indicated annual distribution of $0.90 per unit and $1.46 in fiscal 2007.
    " Although some degree of propane acquisitions are likely, our estimates do not include any growth from propane deals.
    " Due to the law of large numbers, growth via acquisition in the propane industry will likely slow over the next three to five years. We anticipate the midstream area will provide both internal and acquisition growth opportunities over the longer-term.
    We view NRGP as an attractive �leveraged� way to play the expected solid growth at NRGY. Growth at NRGY should come from a steady flow of modest sized propane acquisitions, although not incorporated into our earnings models, and integration of the Star Gas propane operation with results skewed overall by year-overyear
    trends in winter weather conditions. In addition, the pending/expected Stagecoach natural gas storage acquisition and our expectation of management�s continued effort to grow via acquisitions in the midstream/pipeline sector, should in total foster meaningful growth, thus, attracting more investor interest. We rate NRGP a Buy for aggressive investors with a price objective of $36. However, due to the recent price performance of the units and the relatively thin trading float, investors should consider averaging into their full position over time. We recommend using limit orders to reduce near-term trading risk when buying or selling MLPs."

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    • Thanks for the info... I have position in both this stock and SGH the company that sold its LP to NRGY. The latter is just a trading stock to me but one that seems to increase in value just prior to its earnings release... Given that the SGH will report on the same day as NGRY.. it once again has begun to move upward based on much higher volumes. This will be the fourth time I have traded into this stock -- hoping history repeats itself once again.

 

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