Seeking Alpha
Profile| Send Message|
( followers)  

Reflecting its concentration on natural gas, buy-recommended Hugoton Royalty Trust (NYSE:HGT) has the eventual appreciation potential of the world’s most attractively priced energy for fueling global growth. In contrast to other commodities that have rising price, natural gas has a price that has barely moved from $5.34 a million BTU for delivery in North America over the next six years. The declining 40-week average is $5.45.

Actually, HGT's stock price is in a steadily rising trend above its 200-day average, helped perhaps by its modest oil concentration at 11% of Present Value and about 21% of cash flow (NTM Ebitda) . Yet, income investors don’t need much stock price appreciation because the trust offers a cash distribution estimated at 6.0% for the next twelve months. Relevant tables can be viewed here.

Click to enlarge

Originally published on March 11, 2011

Source: Contrarian Commodity Income in Hugoton Royalty Trust