InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

$1,230 in Instant Income?

$1,230 in Instant Income?Our top income expert recently pulled the wraps off his breakthrough moneymaking technique. And he proved beyond a shadow of a doubt how you can use it to generate instant cash payouts of up to $1,230 (or more). Over and over again. But then he took things a big step further and guaranteed you can make $1 million by following his program. And the second he did, our phones went nuts! Space is limited — get the details here.

 

 

Tank Farms Fuel TransMontaigne

By Robert Rapier on April 12, 2016

In this week’s Energy Letter, I discussed a stock screen used last week to identify companies that might have otherwise been filtered out by my more typical search parameters. I use a proprietary screening tool that extracts data from the S&P Global Market Intelligence database. These screens are one level of due diligence, which is then followed by a deeper evaluation of the most highly ranked screen prospects.

For more details on this most recent screen, please refer to this week’s Energy Letter. As I indicated there, most of the stocks identified by this screen would likely fail my further due diligence, but the one at the top is worth a deeper dive. That’s what I want to do here today.

If the name TransMontaigne Partners (NYSE: TLP) sounds familiar, it may be because this Denver-based master limited partnership was highlighted here in February in A Fast Start With More Promise as the top-performing MLP to that point in 2016. At that time TLP was up 22.7% year-to-date (YTD), and it has continued to rise. It is now up 43.7% YTD, and 19.7% over the trailing 12 months (TTM). In fact, TLP is one of only nine MLPs with a positive TTM return.

So let’s take a closer look at TLP’s business.

TransMontaigne Partners provides integrated terminaling, storage, transportation, and related services to customers engaged in the trading, distribution, and marketing of light and heavy refined petroleum products, crude oil, chemicals, fertilizers, and other liquid products. It does not purchase or market any of the products it transports.

TLP’s facilities include:

  • A 7.1 million barrel terminal on the Houston Ship Channel
  • Eight refined product terminals in Florida with 6.9 million barrels of storage capacity
  • A 67-mile interstate refined products pipeline between Missouri and Arkansas
  • Two refined product terminals in Missouri and Arkansas with a storage capacity of 421,000 barrels
  • A crude oil terminal in Cushing with a storage capacity of 1 million barrels
  • A refined product terminal located in Oklahoma City with storage capacity of 0.2 million barrels
  • A refined product terminal located in Brownsville with storage capacity of 0.9 million barrels
  • A 16-mile LPG pipeline from its Brownsville facility to the Mexico border
  • A light petroleum products terminal located in Brownsville with storage capacity of 1.5 million barrels
  • 12 refined product terminals located along the Mississippi and Ohio rivers with 2.7 million barrels of aggregate storage capacity
  • 22 refined product terminals located along the Colonial and Plantation pipelines with aggregate storage capacity of 10 million barrels

Because its primary business is moving and storing refined products, TLP hasn’t suffered like most of the midstream MLPs that handle crude oil or natural gas. TLP has managed to maintain positive free cash flow (FCF) throughout the meltdown in oil and gas prices and in fact reported year-over-year growth in 2015 across most important financial metrics. For 2015, TLP reported:

  • Annual net earnings of $41.7 million compared with $32.5 million in 2014
  • Distributable cash flow (DCF) of $70.7 million compared with $65.7 million in 2014
  • A distribution of $2.665 per unit (flat year over year), with annual distribution coverage ratio of 1.39x
  • Consolidated EBITDA of $89.6 million versus $74.8 million in 2014
  • Operating income of $49.9 million versus $38.9 million in 2014.

Increased revenue at the Brownsville and river terminals drove last year’s gains, more than offsetting declines elsewhere. Direct operating costs and expenses were $2.2 million lower than in 2014.

TransMontaigne Partners has an enterprise value of $914 million, and $273 million in liabilities. The partnership ended the year with a debt/EBITDA ratio of 3.6, better than the 4.7 average for its midstream MLP peer group.

TLP is controlled by its general partner, TransMontaigne GP, which was sold on Feb. 1 by an affiliate of NGL Energy Partners (NYSE: NGL) to a private equity fund.

TLP hasn’t issued guidance for 2016, but analysts estimate EBITDA will rise 3% on average, while DCF is expected to be little changed from 2015.  

Based on the most recent quarterly distribution, TLP yields 7.1% on an annualized basis. The median price target for this year for the three analysts covering the company is $40/unit, which is only about 6% above the current price after the sharp rally year-to-date.   

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

 

 


You might also enjoy…

 

R.I.P Bull Market—Here’s How To Protect Your Wealth

I hope you’ve enjoyed the phenomenal bull market of the past eight years…

Because it’s about to come to a screeching halt.

The Federal Reserve’s nearly decade-long spending spree has finally come to an end.

With no other options left at their disposal, the Fed has no other choice than to raise interest rates to keep inflation in check.

And that leaves you with two options…

Do nothing and suffer the agony of watching the profits you’ve accumulated over the years evaporate right before your eyes…

Or reposition your portfolio and invest in companies which prosper as inflation rises and interest rates soar.

I think the choice is clear. And I’ll show you the best new positions you can take if you click here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.