World Point Terminals: Port in the Storm

02/04/2015 8:00 am EST

Focus: MLPS

John Dobosz

Editor, Forbes Premium Income Report and Forbes Dividend Investor

When the market is weak, I like to look for relative strength, and one place I’m finding it is in a master limited partnership that stores energy-related products, explains John Dobosz, editor of Forbes Dividend Investor.

St. Louis, Mo.-based World Point Terminals (WPT) owns 12.8 million barrels of storage capacity at 14 strategically located terminals along the East Coast, Gulf Coast, and in the Midwest regions of the United States.

It stores gasoline, distillates, jet fuels, light refined products, residual fuel oils, and liquid asphalt, heavy refined products, and crude oil.

The units have been a port in the storm; they are up 6.5% from our initial buy at $18.70 four months ago. That’s saying something, since many MLPs, like those tracked by the Alerian MLP Index, have been hammered 20% lower over that same time frame.

Analysts expect WPT to post revenue growth of 9% for 2014 and this year. The next earnings report comes out at the end of March. Net income per unit is expected to more than double in 2014 and to grow 8.5% this year.

As an MLP, World Point is required to pay out substantially all of its net income as distributions to avoid taxation at the corporate level.

Currently, those distributions are paid out at a rate of $0.30 per quarter, for an annual rate of $1.20 and a yield of 6.02%. Distributions are comfortably covered by cash from operations over the past twelve months of $1.75 per unit.

WPT has only been publicly traded since August 2013, but it retains discounts to average multiples of book value and enterprise value to EBITDA that made it attractive in the first place, when originally recommended last September.

If you don’t already own it, it’s a good time to get some, and if you already do, consider adding to your position.

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