I am busy this week at Investing Daily’s annual Wealth Summit in Alexandria, Virginia, but I promised to eliminate the rest of the Holds from the portfolio this week. The previous article mostly dealt with Holds that were to be sold. Today, I had intended to convert the remaining Holds to Buys. But as I looked into the most recent news and the outlooks for these companies, I decided to convert a few more to Sells. However, four Holds are going back into the Buy column. As before, I provide a brief rationale in each case. 

Energy Strategist Portfolio Update

• AmeriGas Partners LP (NYSE: APU) downgraded to Sell 
• GasLog Ltd (NYSE: GLOG) downgraded to Sell
• National Oilwell Varco, Inc. (NYSE: NOV) downgraded to Sell
• UGI Corp (NYSE: UGI) upgraded to Buy below $52
• Energy Transfer Partners LP (NYSE: ETP) upgraded to Buy below $40
• PBF Logistics LP (NYSE: PBFX) upgraded to Buy below $25
• Western Gas Partners LP (NYSE: WES) upgraded to Buy below $68

Trade Rationale

AmeriGas Partners LP (NYSE: APU) is the nation’s largest retail propane marketer. Over time, propane distribution profits have proven resilient, but AmeriGas has a lot of debt, and it isn’t cheap. UGI Corp (NYSE: UGI) is a holding company that not only distributes propane both domestically (through Amerigas) and internationally, but it operates natural gas and electric utilities,  manages midstream assets, and engages in energy marketing. UGI has much less relative debt, it trades at more attractive multiples, and it is safer and more diversified than Amerigas. Further, UGI has 29 consecutive years of dividend increases. So I am selling Amerigas and moving UGI back into the Buy column. Sell Amerigas Partners and Buy UGI Corp up to $52. 

Investors punished Energy Transfer Partners LP (NYSE: ETP) over the past two years due in part to disappointing distribution coverage, and ETP CEO has been rightfully criticized for some of his moves. (See Igor Greenwald’s article The Kelcy Warren Discount). Nevertheless, the merger of Sunoco Logistics (NYSE: SXL) and Energy Transfer Partners will allow the combined entity to cut annual distributions to unitholders by a little over $600 million (cutting the current 11.6% yield – but this expectation is priced in). This should bring coverage back to a respectable ratio, and allow the merged entity’s distribution growth to reach the forecasted “low double digits.” Regardless of recent history, ETP has a long track record of superior performance, and I expect it to get back on track following the merger. Buy Energy Transfer Partners up to $40.

Liquefied natural gas (LNG) volumes from the U.S. are increasing, and that’s good for GasLog Ltd (NYSE: GLOG) as long as those trends continue. On the other hand, investors have bid units sharply higher over the past year, despite some recent financial weakness. This has pushed the yield below 4%, which in my view isn’t enough to justify the risk. I can think of higher-yielding companies with lower risk that I would prefer to have in the portfolio, and given the ~50% return over the past year, I think this is a good time to exit this position. Sell Gaslog Ltd.   

The rig count in the U.S. continues to rebound sharply, and oilfield supplier National Oilwell Varco, Inc. (NYSE: NOV) has rallied. The company has struggled for the past couple of years as drilling dried up, but after the rally in its shares, it is priced with optimistic expectations built in. If drilling slows, NOV could tumble quickly. As a result, I view the current price as a good exit point given the high expectations that are already built into the price. Sell National Oilwell Varco.

I expect refiners to perform well under President Trump, and the refinery logistics providers to benefit in tandem. PBF Logistics LP (NYSE: PBFX) has raised its distribution nine straight quarters, and management has projected 34% revenue and 32% net income growth in 2017. PBFX currently yields 8.5%, and coverage in 2016 was 1.28x. Buy PBFX up to $25.

Western Gas Partners LP (NYSE: WES) has been a solid performer since first being added to the portfolio in 2012. WES provides midstream services for Anadarko Petroleum Corporation (NYSE: APC), and they have consistently increased distributions for years. The coverage ratio in 2016 was 1.29x. In just the past five years, distributions have nearly doubled. Management has guided for 2017 and 2018 distribution growth targets of 7% to 9%. I expect this one to continue to outperform. Buy Western Gas Partners up to $68.