Domestic natural gas production has exploded over the past five years. One of the beneficiaries of this increased volume is natural gas storage facilities. This should continue for the foreseeable future as low prices drive additional demand and as the fuel gains additional converts from coal. One stock ideally positioned to take advantage of this secular trend is high yielding PAA Natural Gas Storage (PNG) which just reported earnings.
Earnings highlights for PNG:
- In its just released earnings report, it beat on both the top and bottom lines.
- EBITDA grew 43% Y/Y in the quarter as well.
- Earnings estimates for FY2012 and FY2013 have ticked up over the last month.
4 reasons PNG provides solid value for income investors at just over $18 a share:
- The latest quarter marks the fifth straight quarter that PNG has easily beat earnings estimates. The average beat over consensus over that time span is significantly north of 20%.
- Insiders have been net buyers of the shares over the past year.
- The stock yields 7.8% and has increased payouts by more than 60% over the last two years.
- PNG sells for just 4% over book value and has a compelling five year projected PEG (1.28) for a vehicle that yields almost 8%.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PNG over the next 72 hours.