Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Tastylunch Three stars, 500 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1640  
Subject: Western Gas Partners Lp (WES) Date: 2/24/2009 10:54 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I''m having trouble, finding great plays based off actual growth numbers lately (nobody s growing it seems like). Which I suppose is yet another sign that value is the way the market long when it rebounds

at any rate on an unrelated note this was one the better income plays I see out there right now.

Western Gas Partners Lp (WES)

what they do:

Western Gas Partners, LP focuses on the ownership, operation, acquisition, and development of midstream energy assets. The partnership engages in gathering, compressing, treating, and transporting natural gas for its ultimate parent, Anadarko Petroleum Corporation, and third-party producers and customers. Its energy assets comprise six gathering systems, five natural gas treating facilities, and one interstate pipeline in East Texas, the Rocky Mountains (Utah and Wyoming), the Mid-Continent (Kansas and Oklahoma), and West Texas. Western Gas Partners, LP is based in The Woodlands, Texas. Western Gas Partners Lp operates as a subsidiary of Anadarko Petroleum Corp.(from yahoo).

Basically a recent spinoff of Anadarko here. It IPOed early last year. They are a midstream handler of natural gas meaning they a little less sensitive to price swings as they aren't really a producer or end user.The company is a Master Limited Partnership so please be aware of the potential tax issues for yourself.

Macro/Sector outlook:

Well Natural Gas has been beat up lately no doubt. what commodity hasn't? However Obama has singled out natural gas as a big part of his stimulus plan so there could be a turnaround there.

Either way WES primarily cares about volume of work not so much the price. Obviously a higher price for nat gas would be beneficial to that, but the fact the obviously have a lockstep relationship with Anadarko should keep demand for their services fairly stable in down times as well

The Numbers:

Market CAP 362.27M (or 724.43M? Yahoo and CAPS disagree)
Trailing P/E 11.80 (forward 7.98 ?)
Price/Book 0.55
PEG- 1.60 according to Finviz, 1. according to morningstar
looks like they are growing income according to reuters
http://www.reuters.com/finance/stocks/incomeStatement?symbol...
Dividend 8.79% yield currently
Debt to Equity 0!
well actually I believe that's no longer true it looks like they may have just taken on 175 million debt to Anadarko to purchase a set of assets known as the Powder River Basin Assets, yet I see no mention of this on any financial site. I saw this buried in the latest 10-Q

Techinal Analysis:

A little bullish, just hit the lower edge of its channel. 50 sma is about to cross the 200. Tasty likey that. Had a big dump day on the 23rd don't know why, think it was due to the natural gas commodity itself


Risks/Rewards:

The main risk is Anadarko. The two companies share a credit line and if either company maxxes it out the other will no available credit. I think this is very unlikely but it's worth noting.
Also Anadarko may not give WES the best possible deals in asset sales and of course WES will have no say in the matter.

However the minimal debt size, the yield and the fact it is trading under book says to me there is potential for a double here under the right conditions. More likely it's a twenty-40% gainer.

Obviously the PEG is suboptimal,but really I think the valuation and the yield are the main story here.

I believe it has been overlooked due to when it IPOed, that's an opportunity for us.

WES is a five star in CAPS with no allstar underpeforms expect for maybe one of CHk's duplicate accounts. In fact that is the ONLY bear.

It seems to be trading at an oddly multiple to sales versus its competitors but they mostly all have a lot of debt whereas WES doesn't.


Tasty's Final Take:

If you are looking for an income play that might generate some mild appreciation WES might be a good one to consider.I think the downsides are fairly limited here barring some insanity on Anadarko's part. But I also don't think there's tremendous upside either.

Criticism or any other thoughts always welcome
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Post of the Day:
Value Hounds

Medallion Financial: TAXI!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement