Please ensure Javascript is enabled for purposes of website accessibility

Why Atlas Energy's Shares Popped

By Travis Hoium - Apr 17, 2013 at 4:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Atlas Energy (ATLS) jumped 11% today after it announced an acquisition by subsidiary Atlas Pipeline Partners (NYSE: APL).

So what: The company is acquiring TEAK Midstream for $1 billion in cash, which will be paid for, in part, by a $400 million preferred share offering from Atlas Pipeline Partners. Atlas Energy expects the acquisition to add $25 million to $40 million in annual distributions, or $0.45 to $0.75 per share, when the assets are mature.  

Now what: The acquisition looks to be extremely profitable for Atlas Energy and gives the company exposure to the growing Eagle Ford Shale play. Based on the projected cash flow from Atlas Pipeline Partners, I think the market has fully priced in the benefit of the acquisition, so I'm not jumping on shares today. Remember that this isn't a fully mature asset yet, and it'll take time to increase distributions to the projected level, so the $5.00-per-share jump today has a lot of optimism built in.

Interested in more info on Atlas Energy? Add it to your watchlist by clicking here.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Atlas Energy Group, LLC Stock Quote
Atlas Energy Group, LLC
ATLS

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.