Chesapeake Utilities Corporation CPK announced that its unit, Sharp Energy, Inc. has expanded propane operation in Pennsylvania through the purchase of propane operating assets of Lehighton, PA-based R.F. Ohl Fuel Oil Inc.
The acquisition of propane assets will increase Sharp Energy’s existing propane customer base in Pennsylvania, which stands at 6,000, by another 2,500 customers. This acquisition is a strategic fit and is in line with the company’s plan to expand operations in the region.
Acquisitions Help in Expansion
Chesapeake Utilities continues to expand propane business through acquisitions. The company’s unregulated energy business, Flo-gas acquired certain operating assets of Chipola in August 2017 and Central Gas in December 2017. Both these acquisitions added a total of 1,125 propane customers to its existing base.
As a result of acquisitions and organic growth at the end of the third quarter of 2018, the company had the capacity to store nearly 7 million gallons of propane compared with 6.2 million in the year-ago period.
Another very active acquirer is Ferrellgas Partners, L.P. FGP. This partnership firm keeps on making strategic acquisitions to expand its propane operation across the United States. In nearly 80 years of business, Ferrellgas has acquired more than 250 independent companies to expand propane operation.
Importance of Propane
Per the U.S. Energy Information Administration (“EIA”) release, nearly 5% of all U.S. households utilize propane for heating purposes, and majority of these households are in the Northeast and Midwest. EIA expects propane spending in the Northeast to increase 1% this winter from the last winter.
Chesapeake Utilities’ decision to expand its operation in the Northeast region via acquisitions seems to be a prudent one, given the expected rise in the usage of propane in the region.
Chesapeake Utilities’ shares have gained 12% in the past 12 months compared with its industry’s growth of 3.7%.
Zacks Rank & Key Picks
Chesapeake Utilities currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the same industry are ONE Gas Inc. OGS and Southwest Gas Corporation SWX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ONE Gas and Southwest Gas reported positive earnings surprise of 10.71% and 78.57%, respectively, in the last reported quarter.
The Zacks Consensus Estimate for 2018 earnings of ONE Gas and Southwest Gas has moved 0.9% and 1.3% upward, respectively, in the past 60 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
Chesapeake Utilities Corporation (CPK) : Free Stock Analysis Report
Southwest Gas Corporation (SWX) : Free Stock Analysis Report
Ferrellgas Partners, L.P. (FGP) : Free Stock Analysis Report
To read this article on Zacks.com click here.