I am consistently looking for income producing vehicles for part of my portfolio. I have been successful buying energy MLP's over the last six months and look at the area for new ideas frequently. When a stock in the sector has several catalysts/positive events in short order, I pay attention. Recently this has happened with Inergy (NRGY)
Key recent catalysts for Inergy:
- The company was upgraded at Raymond James this morning.
- Suburban Propane is going to buy Inergy's retail propane business for $1.8B.
- Robert W. Baird upgraded the stock on Thursday.
4 reasons Inergy is an intriguing income buy at under $20:
- The sale of its retail propane business will make NRGY a pure play midstream business and will allow it to substantial reduce its debt level as well.
- Insiders have been net buyers of the stock over the last six months with a couple of officers making significant buys late last year at higher prices.
- The stock yielded 16% prior to sale of its retail propane business. It had steadily raised its distribution payouts over the last decade. Payments had doubled over the last ten years, and continued to grow right through the economic crisis of 2008/2009. The yield after the sale will be north of 7.5% and the smaller company should be able to consistently raise payments based on the increasing demand for its core storage and pipeline assets.
- Credit Suisse has an "outperform" rating on the stock and the company has some attractive assets including two strategically positioned natural gas storage and transportation hubs, one the Northeastern U.S. and one in Texas.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NRGY over the next 72 hours.