I continue to believe we are due for a rest in the market if not an outright pullback as the current six month rally feels like it will run out of steam soon. I think investment vehicles with low beta and high dividend yields should outperform the market for the rest of the year. One I like here is Vanguard Natural Resources (VNR).
"Vanguard Natural Resources, LLC, through its subsidiaries, engages in the acquisition and development of oil and natural gas properties in the United States. Its properties are located in the southern portion of the Appalachian Basin, primarily in southeast Kentucky and northeast Tennessee; the Permian Basin, primarily in west Texas and southeastern New Mexico; and south Texas." (business description from Yahoo Finance)
7 Reasons to pick up VNR at $27 a share:
- It yields a robust 8.6% and has doubled its quarterly distribution over the past four years.
- The stock is showing increasing technical strength and just cross over its 100 day moving average (see chart)
- Insiders show confidence in the stock. There has been no insider selling in over a year. The last transactions were two insider buys in May 2011 at around current prices.
- The median price target for the 7 analysts that cover VNR is $32 a share.
- Consensus estimates for FY2011 and FY2012 have risen over the last three months.
- The merger with Encore Energy Partners should drive growth in revenues and reserves going forward.
- The company has quadrupled operating cash flow over the last three years and sells at about 7 times OCF.