I can only hope you're right. However, I've been burned before by pie in the sky estimates, so I'll stick to my original estimate of $.80/share and do my buying accordingly. Of course, it really doesn't matter - in either case this stock is undervalued by any metric. The question isn't whether or not this stock is worth the price, it's more of a question of where I should put my limited investing funds. If I had an unlimited account, I'd just buy this stock until it got so expensive that the return on investment was only about 8 or 9 percent and then I'd call it good.
I agree that NTI has earned more in the past on a per dollar basis of investment, but my math doesn't support the same thing with CVRR. The fact that CVRR had such a good quarter is a good sign for them, so we need to wait until earnings come out for ALDW to update the comparison. I think that ALDW will also have a good quarter, so my bet is that the value of this stock very close to the other two. One thing I can't figure out is why these new mlps are all significantly undervalued when compared with other refineries and the market as a whole. To me, money is money and my investment dollars will follow the money.
You probably need to do convince yourself if you're a real investor. I'll give you a place to start - it's all about the return on your money. Look at the history of both companies and the earnings per share. Look at debt and all that stuff Warren Buffet talks about in his Intelligent Investor book. Also consider the fact that this refinery has done a major debottlenecking of the vaccuum distillation unit and has recently completed a major turnaround that won't have to be done again for another 3 to 4 years. I guess the other major thing to think about is the future margins that are expected. This gets to be pretty speculative, but it definitely needs to be done. It depends on oil inventories, demand etc. My conclusion wasn't so much that it was that much better, but it did show a slight advantage in the way I weighted things. I think that at the present time, you might want to wait until the next earnings announcement in order to get a clearer picture of which way the wind blows.
I'd much rather own something that generates an income than play it safe by dogging a good thing with poor assets. It's much better to own this than to own something that is less than desirable. I do agree that a person should spread the risk of their investments, but that can be done by buying more than one stock. The fact remains that this stock has outperformed nearly every other stock in the short time that it has been around in spite the fact that they have had two downtimes. I just hope nobody follows your line of reasoning and dogs this refinery with poor assets or with a poorly structured merger of good assets. The way this is structured at this time is good and it generates a good bottom line. I would wonder about someone who could review this stock and say that it is anything but a buy.
Look at it this way: If you buy this refinery stock then you can go out and choose to put the rest of your money in whatever company you want - to spread the risks. If you buy a stock with several refineries, you don't get to pick and choose what assets you want - you have to take it as a whole. It would be awesome if all the other refiners broke their companies into individual refineries and allowed us to cherry pick what assets we wanted! Think of it like playing fantasy football with investments - you could really put together your dream team.
You would do well to keep this one over a quarter. Over the 2.5 years it has been around, it has returned well over $6 in dividends. If a person had bought this stock on the IPO and just kept it and re-invested the dividends, he would recoup his initial investment in short order. The really funny thing is that this refinery has not had really good operations and has had a turn-around at an awkward time of year. These down times have adversely affected the earnings of this stock, but it has still performed. In refining, some of the profit is just the luck of the draw. What would have happened if timing had been more fortuitous? This stock would be flying! I expect that in the long run, the performance of this stock will be better. If you've ever heard the sayings "You can't win them all", there is a flip side that says "You can't lose them all either."
Good job! I added what I could during the slump, but I won't sell until I feel that the time is right. I believe that it is way below market value but I'm not above taking a temporary profit if I think the timing is good. I don't fault you for taking 5 %, because it's all good when you can do that in one day, however, I believe it will soon go higher.
My question is why do these MLPs trade at a significant discount to other refining stocks? In my case, it makes very little difference that the mlp is taxed after the distribution. Also, if it is owned in a retirement account, it makes no difference at all as far as I can see. Maybe I'm missing something?
Your way off base. Even if they only make .50/share, they are still fairly priced compared with others in the refining sector. However, I would caution not to invest in refining stocks for the short run. Look at the performance of this stock over the life of the mpo. It is definitely a top performer among refiners and even more so when compared with the rest of the pathetic market.
It's getting close to that time again. I'm going to throw out a rough estimate of $.80/share as my guess. I don't really do any hard modeling, so it's more of a guess than an estimate. Does anybody else have an opinion on what earnings will be? Are you still out there JVRAT?
I haven't had much luck investing in E&P. I do hold some stocks that have been beaten down such as OAS and MPO. I don't know how to evaluate them very effectively because things are so volatile, but I thought I'd buy a little just on the off chance that things would turn around. Like I said, I don't own very much - it's more of a batting for the fences type strategy. (I figuire these companies will either go bankrupt or have a dramatic turn-around.) My main holdings are in refining. I am particularly enamored with ALDW, NTI, and I've been thinking about buying CVRR. I also think HFC, VLO, and WNR are good buys, but I don't think they have quite the same potential as the former 3 because it appears that ALDW, NTI, and CVRR are undervalued a bit more. I haven't really loooked at pipelines much, except I do keep tabs on Marathon, but I don't own any at the present time.
I'm not complaining, but I checked my stocks today and found all of them down significantly, but this one. It just seems odd. Is there a reason, or is it just one of those quirks of nature? Who knows? However, I am glad that this is my major holding at this point.
I would probably agree with you for the most part. However, I think they are all screaming buys if they were compared with the rest of the stock market. In fact, all three are above the average return for the refining industry itself. I don't know why refining is chronically undervalued, but my theory is that people believe that there is disruptive technology that will take the whole industry down. I think most people are living in a fantasy world, but that is a whole other story.
I do believe that a large part of the investment sector is betting that some disruptive technology is going to make oil and refining obsolete. Tesla is way overvalued by any reasonable metrics and the refining sector is significantly undervalued. I see that solar and electric will probably take a hunk out of oil, but I don't see it being significant for another 10 to 15 years. I definitely think the solar industry coupled with better batteries has the capability of playing a significant role in transportation in the future. However, I don't think it will ever displace oil as long as there is a supply in the ground.
The fact of the matter is that electric cars are not significantly greener than gasoline driven vehicles as long as our power comes from coal. If the country could switch to nuclear and this would be coupled with advances in solar, I think it might make the oil industry stagnate. However, I can't see this happening in the foreseeable future. Even if the oil industry is stagnate, it won't go away. Tougher CO2 emission laws may drag the industry down, but I'm not worried about my refining stocks. They will continue to be profitable. They will pay for themselves through dividends alone. If at the end of the decade, it looks like things will change, I may sell. I consider the low price of refining stocks to be a gift to my portfolio!
I've invested in refining for the last 22 years and have found it to usually be very profitable. I think I've beat the DOW and the S&P 500 over the time span that I've invested. The funny thing was that even back when I started, I heard people saying that oil was a dead end and that it would soon go away. I also do believe that oil is going to go away, but probably in about 200 years. Until then, or until the end of the world as we know it, this is a great sector to invest in. Just remember to do your homeowrk and keep your eyes open!
GG - I guess I don't follow your line of reasoning. By my metrics (which are somewhat crude), the values seem pretty close. However, it appears that ALDW edges CVRR out by a small amount at these prices. The only one that I have found that seems somewhat higher by my metrics is NTI. Presently, I have only about 25 % of my refining portfolio in NTI because I believe that ALDW hasn't come into it's own yet. However, I'll admit that CVRR looks pretty good too, I may diversify a small amount into it if I get the opportunity - maybe today would be a good day!
Does anyone think that this company will be bought out in the near future? It seems like WNR purchased a lot of shares in the company and it seems logical that they would just go ahead and buy the entire thing in the near future. If this is the case, I would have to think they would do it soon, while the stock is still low enough to be considered a bargain. I'm sure they'd have to pay a premium on it compared to today's prices, but it seems like a reasonable move. I feel that WNR has the managment capacity to take on more, but I don't know which direction thay may go. It's hard to find a really good deal in today's business environment, so they may not do anything at the present time.