STOCK QUEST? Why are Natural Gas Pipeline Stocks not doing better?
Most have excellent track record of paying dividends over 7%. They do not drill or own the gas. They get paid to store & transport it regardless of Nat Gas prices. Some of these stocks look attractive to me but a major Co.has this entire sub sector rated as "D". Why?
April 10th, 2010 at 10:28 am
I do not know for certain why the sector is rated D by a particular broker. No one is ever in agreement as to the ratings of companies. Some will rate them a sell while others a buy. Currently, ETP is rated a buy by Zacks, Channel Trend, S&P, and Market Edge. Neutral by several others. It might be because the price of gas is quite low at the moment.
It is my opinion that the pipeline LPs are a reasonable deal. They have a very sound record, better than about 90% of the companies traded. There are however a couple of points to be considered. They are regulated and the do have a capital structure that relies heavily on borrowed money. The latter point might be why the sector is rated D.
I very seldom put any faith at all in broker ratings. They are not at all reliable. Use your own best judgment.
April 10th, 2010 at 10:28 am
Because they are in the pipeline.
April 10th, 2010 at 10:28 am
I would not invest in Natural Gas. Its not going to be a replacement for oil when it runs out. Natural gas is hard to use in vehicles and fairly expensive.
Hydrogen Fuel cells and solar power are more likely to be a good investment.
April 10th, 2010 at 10:28 am
They are controlled by major players who just need the facility of moving gas from A to B for least cost possible. They cost (c) $2K/Lin Metre to put down and they are not an earning component for a producer or a buyer. Look for pipelines that are not owned by producers or buyers these pipeline can charge a good rate.
April 10th, 2010 at 10:28 am
They are not doing well now because the recession has closed the office buildings and factories that are the final users of the natural gas that flow through these pipelines. So volume of thoughtput (natural gas flow) is down now. Once the factories start reopening, and people realize making a vehicle to run on natural gas is a lot easier and CHEAPER than making one to run on hydrogen (most of today’s gas stations have a natural gas pipeline running near them, not so for hydrogen pipelines, so I disagree with the above responder) the ng pipe companies should do better. T. Boone Pickens is changing his energy plan from partly building wind farms to concentrating on switching big rig trucks from dirty diesel to cleaner natural gas. That should also help the pipeline companies increase volume.
April 10th, 2010 at 10:28 am
Because of the recession and unemployment there is less gas flowing through them. Industrial use, which is the biggest factor, is way down. More capacity and less natural gas.
April 10th, 2010 at 10:28 am
There is a disparity between the price of oil vs. the price of natural gas. Oil is high, and gas is very low. Until this lessens, maybe with colder weather on its way, or a hurricane destroying rigs in the Gulf region, not much will change.