The guys who run this company are smart guys, who emphasized in their most recent webcast that they intend NRGY to prosper and benefit from their other offerings, not be overshadowed by them.
Now I see some data from the national Energy Information Administration that says the propane industry should be a very profitable one this year. 6.6 million households use propane as their primary heating fuel. The EIA estimates that the average propane heating household will use 818 gallons of fuel this winter, up 3.5% from last year.
The average residential price of propane is expected to be $1.73 per gallon, up a whopping 22.1% from last year. The amount the average propane heating household will spend to heat this winter is expected to be up 26.4%.
This company is well-positioned to make the most of that potential.
Several posters have been excited by the prospect of rising energy costs. Rising propane prices might or might not help. Rising residential prices don't help if NRGY's cost rises more. This would depress margins. If residential prices 22 percent, households will try to restrain purchases by turning down the thermostats and taking conservation measures. There is the potential for lower margins and lower volumnes. I am optimistic about the company and agree that management is smart. However, rising retail prices could actually hurt performance.
Maybe I should not say this, but : I assume NRGY has a hedging system to control propane costs. I still like the fact they raised their dividend again. 29 bucks a share by Feb 3 does not seem unreasonable.