Plains All American: Catalyst For Growth, 1.7x Coverage, Safe Yield (Rating Upgrade)

The Asian Investor
29.3K Followers

Summary

  • Plains All American offers an attractive 8% distribution yield, which is well-supported by distributable cash flow.
  • The sale of the Canadian NGL business streamlines the portfolio and improves the percentage of EBITDA contributions from fee-based contracts.
  • Permian Basin exposure is a key growth driver, positioning Plains All American for long-term transportation volume growth.
  • PAA makes a solid value proposition based off of valuation: it is cheaper than other MLPs in the market, offering upside.
  • The risk profile is favorable, but a drop in distributable cash flow or distribution coverage may change my positive outlook.

View of the natural gas pipeline exiting the ground to the receiving and starting chamber of the cleaning device, piston, pig

Denis Shevchuk

Plains All American (PAA) is a publicly traded master limited partnership with critical and energy transportation and storage assets in its portfolio. Plains All American focuses on the transport of crude oil, natural gas and natural gas

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of EPD, MPLX, KMI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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