Interesting Income Stock: NuStar Energy

Well I was researching some stocks and came across. NuStar Energy LP (NS)

This company is a limited partnership that seems to have several things it is trying to do at once. First they are an oil storage company that provides 80 million barrels of storage at 65 terminals. They not only store the oil but provide barges and emergency response and other types of value added services as well. They also own a number of oil and anhydrous ammonia pipelines that are based in the US as well. Finally they have a segment that turns oil into asphalt and buys and sells gasoline and other petroleum products.

The fundamentals look pretty solid with double digit top and bottom line growth year to year. On looking at their 10-Q you can see that the revenue of their asphalt segment is growing great guns with revenue going $1.04 billion from $758 million one year ago. The storage segment went from $125 million from $114 million while the transportation segment fell to $73 million from $75 million. The pipelines segment might get helped out from a 2011 project to provide a pipeline that serves the Eagle Ford Shale. All told operating income was $55.7 million from $33.7 million. It seems that turning oil into asphalt seems quite lucrative for NuStar. I guess you can look into asphalt demand metrics to see if this growth continues going forward.

What actually caught my eye was a great dividend of $4.30 which provides a 6.9% yield. I guess this is pretty much a result of owning those pipelines and oil storage terminals. The only bad thing I could see is that they were carrying 2.4 billion in debt and had only $77 million in cash in the bank. Also they seem to be increasing the debt from quarter to quarter. I guess they are building a leverage horde in order to do more acquisitions down the road.

The stock has been beaten down a bit recently when oil prices dropped from $68 - $70 back down to $62. It bounced perfectly off of $60 so you would probably put you stop below that point. In any case the stock seems like a pretty decent one for income with a growth driver in that oil to asphalt business. They also seem to be a bit lower risk with only a 0.32 Beta.