Saturday, March 2, 2013
Pipeline stocks in focus--they win whatever the price of oil or gas
Today, in 2013, there is a huge push to make the US energy independent, and much of that drive is in natural gas produced by fracking, and when the gas is produced, it needs to be transported, and that is the rub, the bottleneck....there is not enough pipeline to get the job done. While investors in oil stocks or natural gas stocks have to worry always about the price fluctuation of the commodity, with a pipeline stock, which usually yields less, say from 4-5%, they win either way...no matter what the price of oil or gas, it still needs to be transported...Thus, I classify this type of stock, such as EPD, Enterprise Products, or PAA, Plains All American, as grandmother stocks..they have a little less risk and volatility than oil or gas stocks..you will see the beta as usually .50 or so. If you drive from Evansville to Janesville, on the right side, right after you pass the stage coach station of old, or Leydon Station, you will see the pipeline hub of PAA...Stay tuned.