Inergy Stock Falling Is Further Evidence of Current Market Insanity

A small piece in the further evidence of the current insanity in the stock market. Inergy L.P. (NRGY) a nice, growing propane distribution company announced on Friday its 28th consecutive dividend increase. Yet the stock managed to lose 11¢. NRGY now yields a staggering 18.4%!

Inergy is a solid company that continues to grow by acquiring smaller local and regional propane companies. With over 3,000 independent propane retailers in business in the U.S. there is plenty of room for continued growth. NRGY has acquired over 30 companies over the last 3 years and is committed to investing $125 million per year in new acquisitions. Inergy also has a growing midstream natural gas business and strong expansion in their existing propane business.

I do not see any problems with this company and yet, like so many other good companies, the market has hammered the stock. The dividend plus a stock price return to a “normalized” 10% yield would provide a 100% return in a single year.

Disclosure: NRGY is a component of Tim Plaehn’s Income Portfolio.

Comments

[john s. gordon:]

would you have a similar opinion about suburban propane ?
> jack

2008 Oct 12 11:53 AM

[Tim Plaehn:]

Jack, I have never taken a close look at Surburban Propane, so I do not know what their growth strategy is.

2008 Oct 13 06:33 AM

[OneRichOne:]

I've owned this and SPH and APU for several years, good divs - no problems. Always a need for this type of business.

2008 Nov 24 07:58 PM