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I am always on the lookout for new yield opportunities. The continued low interest environment means an income investor needs to look far and wide for nice income payouts at reasonable prices. I personally like Limited and Master Limited Partnerships in the energy space as I believe we are in the early innings of a massive energy production ramp up domestically. I also think Utilities are overpriced here and these entities should outperform the traditional utility sector for yield and growth. Recently I came across PetroLogistics LP (NYSE:PDH) which offers a solid yield and has quite a few positive comments from analysts recently.

Recent Positives for PDH

  • Citigroup upgraded the shares to "Buy" on sustainable Propane-to-Propylene spreads. It also raised its price target from $14 to $17 a share.
  • Stifel Nicolaus also upgraded the shares in early January from "Hold" to "Buy".
  • Dahlman Rose came out in mid-December stating to buy on any stock weakness.
  • Consensus earnings estimates for FY2013 have gone up a dime a share in the last month.

PetroLogistics LP owns and operates propane dehydrogenation facility that processes propane into propylene in North America.

4 reasons PDH makes sense as an income play at under $15 a share:

  1. PDH yields almost six percent (5.9%) and distribution payments should increase in 2013 if the company hits the earnings targets analysts currently have for it.
  2. The company broke even in 2011, but is on track for approximately 90 cents a share of profit in 2012. Analysts have just under $1.40 a share in earnings projected for FY2013.
  3. Since it came public in May, insiders have not sold a share. The stock is also under its IPO price of around $17 a share.
  4. The company has a moderate amount of debt (less than 15% of market capitalization). The stock is also reasonably priced (less than 11x forward earnings) for a six percent yielder.
Source: PetroLogistics: A 6% Yielder Getting Noticed By Analysts Recently