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Recession Resistance
Imagine for a second you're driving and you notice you need gasoline, so you pull into a gas station. You buy gas and perhaps a drink in the convenience store attached to it. If you pulled into the Sunoco (SUN) in Long Island NY, you've not only paid money to Sunoco but also Global Partners (NYSE:GLP). Both are players in the gas distribution market, but only one also invests in the retail stores attached to it.
(Source)
The demand for gasoline is extremely price-resistant, affected little by its varying price or the condition of the economy.
(Source: Bureau of Labor Statistics)
Gasoline demand remains strongly consistent as a household expense. This is because more households cannot simply decide to not drive to work or go get groceries. Gas is a must to do those activities. Yes, we acknowledge that during times of pricing turbulence or economic recession, gas purchases for extra summer trips may decrease. Even factoring this in, gasoline sales and demand remains highly inelastic. Investors seeking recession-proof income need to consider these factors when looking into investments.
So, let's take a moment and examine a security that covers this sector with strong success: Global Partners L.P.
Global Partners L.P. is a master limited partnership, or MLP, that has largely been flying under the radar. It was originally focused on heating oil, and management has carefully transitioned GLP into primarily a gas distribution-focused company.
Note that it issues K-1 tax forms.
In The Family
GLP was founded in 1933 as a single truck heating oil distributor. Since then, it has grown through the acquisition of gasoline stations, convenience stores, pipelines, and storage terminals. GLP is still being run by the same family, with CEO Eric Slifka leading the company founded by his grandfather 83
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