Given the low yields that have been available over the last few years and the robust expansion of oil & gas production in the United States, I am always surprised by some of the solid values that still inhabit the energy MLP space. One that has a robust yield, great growth prospects and recent insider buying is QR Energy (QRE).
"QR Energy, LP through its subsidiary, QRE Operating, LLC, engages in the acquisition, exploitation, development, and production of onshore crude oil and natural gas properties in the United States. As of December 31, 2011, its properties consisted of working interests in 3,867 gross producing wells located in Texas, New Mexico, Arkansas, Louisiana, southwestern Kansas, Oklahoma, Florida, and Alabama." (Business description from Yahoo Finance)
6 reasons QRE is a solid pick for income investors at just $16 a share:
- Several insiders made new purchases in May and June.
- QRE yields a robust 11.8% and has raised its dividend payout 18% in its year and a half as a public company.
- The five analysts that cover the stock have a median price target of $23 a share on the stock. Global Hunter Securities just initiated QRE as a "Buy" in June. It is also one of Oppenheimer's top picks in the space.
- The company has robust revenue growth ahead of it. Analysts predict between 18% and 22% revenue growth for both FY2012 and FY2013.
- QRE is selling at 10.7 times forward earnings, a discount to its historical average (16.2). The company has hedged over 85% of overall production through 2014 and specializes in long-lived assets with stable cash flow.
- The stock is selling at its lows at a public company and appears to be bottoming at these levels (See Chart).