Seeking Safety in High-Yield Energy Stocks (TOT, WHX, PWE, GLP, FGP, EXLP)

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As the US staggers toward a conclusion to the seemingly endless debate over the debt ceiling, many investors might be thinking of parking some assets in a nice safe place. One place to look for those companies is in the energy sector in general, and oil in particular.  Go ahead and throw in dividends as well in a sector that every investor needs to have exposure to.  It is this combination which may offer investors the most safety from the trials and tribulations coming out of Washington D.C.

We’ve run a screen for high-yielding stocks in the various industries in the sector and then checked to see how far the stock is trading below its 52-week high. From these results we’ll highlight six stocks: Total SA (NYSE: TOT), Whiting USA Trust  (NYSE: WHX), Penn West Petroleum Ltd. (NYSE: PWE), Global Partners LP (NYSE: GLP), Ferrellgas Partners LP (NYSE: FGP), and Exterran Partners, L.P. (NASDAQ: EXLP). All except Total and Penn West are REITs or limited partnerships, which typically produce larger payouts because the companies themselves pay no taxes. That’s up to the limited partners.

Total is one of the half-dozen largest integrated oil companies in the world. Based in France, the firm’s market cap is around $127 billion. It’s P/E ratio for the trailing twelve months is 7.24 and its price/book ratio is a low 1.37. The company pays a dividend of $2.73, for a forward yield of 4.9%. No other major integrated oil firm is even close. Shares are trading about -14% below 52-week highs.

Whiting USA Trust I is a REIT that operates as a subsidiary of Whiting Petroleum Corp. (NYSE: WLL), and owns interests in WLL’s operations in the Midwest, the Rocky Mountains, and Texas. The trust is categorized as a drilling company with a market cap of $229 million. It’s trailing P/E is 6.21 and its price/book ratio is 4.0. The current dividend is $2.91, for a forward yield 16.70%. This is the highest yield rate among oil & gas companies traded on a major exchange. The trust’s shares are currently trading about -32% below their 52-week high.

Penn West is Canadian-based E&P company with a market cap of more than $10 billion. It operates primarily in western Canada. The company’s trailing P/E is 22.88, but its forward P/E drops to 13.02 and its price/book ratio is a very low 1.09. The company pays a dividend of $1.10 and its forward yield is nice 4.8%. Shares are trading about -23% below the 52-week high.

Global Partners is a midstream company that supplies unbranded gasoline and other petroleum products to wholesale and commercial distributors. The company’s market cap is about $467 million and its trailing P/E is 22.73. The price/book ratio is 1.35 and the company currently pays a dividend of $2.00 with a forward yield of 8.10%. Shares are currently trading nearly -28% below 52-week highs.

Ferrellgas is one of the US’s largest propane distributors and is categorized as a refining & market company. The company’s market cap is around $1.5 billion and its trailing P/E is not meaningful because the company has posted losses for the past several quarters. It’s forward P/E is a robust 24.57, and its price/book ratio is 6.63. As strange as it may seem, the company pays a dividend of $2 and its forward yield is 9%. Ferrellgas is trading about -31% below its 52-week high.

Exterran Partners is a field services company that operates only in the United States. The company’s market cap is about $752 million and, like Ferrellgas, it has no trailing P/E. It’s forward P/E is 39.0 and its price/book ratio is 2.22. Exterran pays a dividend of $1.90 and its forward yield is 7.5%. The company’s shares are trading about -25% below 52-week highs.

Paul Ausick

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