Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, refined petroleum transporter Magellan Midstream Partners LP (NYSE: MMP ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Magellan's business and see what CAPS investors are saying about the stock right now.
Magellan facts
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Headquarters (Founded)
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Tulsa, Okla. (since 2000)
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Market Cap
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$5.6 billion
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Industry
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Oil and gas storage and transportation
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Trailing-12-Month Revenue
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$1.3 billion
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Management
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CEO Donald Wellendorf (since 2002)
CFO John Chandler (since 2002)
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Return on Equity (average, past 3 years)
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17.3%
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Cash/Debt
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$35.1 million / $1.8 billion
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Dividend Yield
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5.9%
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Competitors
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Enterprise Products Partners (NYSE: EPD )
Kinder Morgan Energy Partners (NYSE: KMP )
Energy Transfer Partners (NYSE: ETP )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 98% of the 487 members who have rated Magellan believe the stock will outperform the S&P 500 going forward. These bulls include cyhong and All-Star rd80, who is ranked in the top 1% of our community.
A few months ago, cyhong tapped Magellan as an intriguing income opportunity: "Robust infrastructure business. Oil and gas is needed in good times and bad times. The high dividend yield helps too."
As the operator of one of the largest refined products pipeline systems in the U.S., Magellan's healthy and stable cash flows continue to drive its five-star CAPS status. Recently, the company even increased its exposure to the mouth-watering Cushing, Okla., and Houston markets after agreeing to buy $289 million of oil storage facilities and pipelines from embattled BP (NYSE: BP ) . To be sure, shares of Magellan have outperformed fellow five-star MLPs Enterprise, Kinder Morgan, and Energy Transfer over the past three months, and currently sit at a slight P/E premium to all of them.
CAPS All-Star rd80, however, explains why Magellan might be worth paying a little bit more for:
Magellan Midstream Partners owns a petroleum pipeline network and an ammonia pipeline network, along with some marine and inland terminals and storage facilities. The partnership recently floated a debt issue to fund a purchase of petroleum pipeline assets and storage facilities from BP Pipelines. I don't know enough about the business to know if it's a good deal or not, but I'm guessing a unit of BP might not have been in the best position to command top dollar for assets when the deal was cut.
Annualizing the last distribution puts the yield on the units at about 6%. [Magellan] has an excellent track record with those distributions, going back to 2001 there has never been a decrease in the distribution. Lots of increases, no decreases -- excellent.
What do you think about Magellan, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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