Global Partners: This 9% Yielder Is Too Good To Pass Up

| About: Global Partners (GLP)

I am big believer in the expansion of North American oil and gas production as new technology is unleashing huge new reserves. Some are even speculating that the United States could become one of top two or three producers in the world in the near future. I have numerous positions in E&P plays and oil service stocks in the growth part of my portfolio. I also have several energy MLP's around the storage and distribution of this growing domestic fuel supply in the income part of my portfolio as I love this area's long term prospects. One of these is Global Partners (NYSE:GLP).

7 reasons GLP looks like a solid income play at $20 a share:

  1. Earnings are not tied to falling energy prices and consensus earnings estimates for FY2012 and FY2013 have moved up sharply over the past month.
  2. GLP yields a robust 9.7% and should have some dividend increases over the next two years if the company meets analysts' EPS estimates.
  3. Earnings are set to move up sharply. GLP made 87 cents a share in FY2011, but analysts have it pegged for $1.40 a share in FY2012 and $1.74 in FY2013.
  4. The general partner has been a heavy buyer in the company's shares over the last few months.
  5. The company is more than doubling rail capacity at its Albany, New York, terminal to boost shipments of cheap Bakken crude from North Dakota to struggling refiners in the U.S. Northeast. This should be complete by the end of summer. It is also building a 100,000 barrel storage facility in North Dakota. These kinds of smart play bodes well for the company's revenue growth which I believe is underestimated by the market (5 year projected PEG of just .76).
  6. The four analysts that cover the stock have price targets that range between $23 and $25 a share.
  7. The environment for the energy sector should improve once quarter end "window dressing" is complete at the end of the week (It has been a dismal quarter for the sector). The stock looks like it is trying to bottom here and recently bounced off this level (see chart).

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Disclosure: I am long GLP.