Oil prices retreated back to $100 after the massive earthquake in Japan. Although, the disaster in Japan created bearish expectations about oil prices Jim Ritterbusch doesn't agree:
A failed rally at the $100 area appeared to reduce buying interest as the market enters a wait-and-see mode as far as fresh Libyan developments are concerned.
Moreover, during the earthquake Japan's nuclear power plants were damaged. Four nuclear plants have already shut down. That might force Japan to import more oil and natural gas which will further increase the demand.
While the increasing gasoline prices are not good for consumers, it will benefit those who invested in energy stocks. Therefore, I screened for the top 5, mid-cap oil and gas companies with a dividend yields of at least 3%. All the companies in this list have a minimum 3 year EPS growth rate of 15% and maximum P/E ratio of 22.
El Paso Pipeline Partners, L.P (EPB): El Paso owns and operates natural gas transportation pipelines. The company holds a 58% general partner interest in Colorado Interstate and 25% share in Southern Natural Gas. Dividends increased over three-fold in just three years; from $0.13 in 2008 to $0.44 in 2010. Net profit margin of 45.20% is well above the industry average. Golman Sachs, Morgan Stanley and Deutsche Bank hold a large number of El Paso shares.
NuStar Energy (NS): NuStar Energy is engaged in the terminal and storage of petroleum products, the transportation of petroleum products, and fuels marketing. Nustar pays regular dividends, and current dividend yield is 6.43%. The company has an extremely health healthy balance sheet with a current ratio of 2.39. Top 3 institutional holders are Tortoise Capital, Goldman Sachs and Deutsche Bank.
Spectra Energy Partners (SEP): Spectra transports, gathers and stores natural gas for customers for industrial and residential use. Spectra is a smart investment for portfolio diversification. Beta value of 0.09 is among the lowest in the sector. The company has a regular quarterly dividend policy with a current dividend yield of 5.57%. Net profit margin of 74.81% and operating margin of 44.36% is among the best in the industry. Kayne Anderson increased Spectra holdings by 87% in the last quarter.
Sunoco Logistics Partners (SXL): Sunoco owns, operates and acquires a diversified portfolio of pipeline, terminal, and crude oil acquisition and marketing assets. P/E ratio of 9.3 is among the lowest in the sector. The company has a beta value of 0.13. For a value investor, such low beta means safe yet high returns. Over last 5 years, quarterly dividends increased from $0.75 in 2006 to $1.18 in 2011. Current dividend yield of 5.4 suggests that Sunoco is a staunch dividend investment. In the last quarter, top 10 institutional investors increased their holdings by 10%.
Ultrapar Participacoes SA (UGP): Ultrapar Participacoes is a Brazillian company that operates in fuel distribution, chemicals and storage for liquid bulk. The company has an aggressive growth strategy. In last 3 years, earning per share increased by 45.76% and revenues increased by 35.23%. Those, who invested in Ultrapar 5 years ago, made enormous profits. The stock price increased by fourfold in the past 5 years; from $4 in 2006 to $16 in 2010. That is a 400% return excluding dividends. Dodge & Cox is the largest institutional holder with 6 million shares worth $100 million.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.