The price target cut to $31.50 by Citicorp really got me moving on my last sale. I have a dickens of a time making money on a stock if I pay more than the WS price target. I'm applying the same logic to holding on to an investment. This logic kept me out of almost all MLP stocks at their highs and even the bluest of the blue chips Kinder Morgan is off its high. I still own some NRGY; just waiting for perhaps somewhat better prices to sell more.
Lots of other stocks out there with better growth stories, dividend/distribution growth and price targets well above current market prices and I think better investments.
propane business is in both a long term and short term decline. Both NRGY and ETP are struggling with their propane business. Price target cut from Citi and I expect more to follow. SPH is also in decline. I have a short-term loss and will not let that turn into a long term loss. So, time to sell and move along. I think the storage business may pull things through for the long term, but I don't see that as a catalyst for this year.
Sold half a couple of weeks ago, sold half of the remaining Friday and will probably sell the rest this week or next.
NRGY is only 60% propane these days. It is 40% midstream. I think it has some very attractive midstream assets in the NE. NRGY may have overpaid for a big natural gas storage facility in Texas. That facility will have to be expanded before it really contributes to distribution growth. NRGY also paid a good premium to acquire its GP. I think that will pay off in the long term but it will be a drag in the short term.
There are certainly MLP's with better growth prospects out there. Still, if you can accept a year or two of no growth, such as ETP partners are experiencing, you can get 8% to wait until growth resumes. I'm not buying here yet, but it is something to think about. Selling and investing in a higher growth MLP is another reasonable alternative, although I think people can do much better than KMP.