“My Top Stock for 2013” (Bryan Perry)

Sniffing out a pick with a12.5% yield that Perry says has "explosive capital gains potential."

By Travis Johnson, Stock Gumshoe, December 17, 2012

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The Investorplace Media folks have gotten awfully quiet lately — I haven’t seen many over-the-top pitches from Louis Navellier or Hilary Kramer of late, and other big promisers like Robert Hsu and Nancy Zambell have moved on or shut down their letters.

But over the last couple of days I’ve been getting questions about the ad from Bryan Perry for his Cash Machine, an income-focused letter from the same publisher, so all is not lost … we’ve still got big promises from these folks to check out.

Perry starts out by telling us that he’s sharing “My Top Stock for 2013,” which is generally enough to get some attention — this is the time of year, after all, when we all start to dream about the riches that will flow our way next year, when we really get it right. And it sounds like it is, again, a pretty high-yielding stock that he’s teasing:

“… in all my years as an analyst of high-yield securities, I’ve never seen one like this… it not only offers a rock-solid 12.5% yield, but also has explosive capital gains potential.”

So … dunno if I’ll like it, but I definitely want to know what it is. Shall we sniff around the ad for some clues?

He says that he’s hit upon “maybe the most foolproof investment” of his career, and tells us that it’s a “true cash machine,” which is lovely … and notes that it’s at the center of a “revolution” that is going to power the US economy for the next hundred years … so no complaints there, but we need some more detail to narrow down the pick.

And it is, unfortunately, one of those irritating “presentation” ads that doesn’t happen to have a handy dandy transcript available when you try to close the page. So I don’t want to prejudice you as you’re planning what to get me for a Christmas gift, but I sat through at least 20 minutes of this drivel for you.

He says it’s cheap now because of the “Fiscal cliff fiasco” … which doesn’t make it stand out much. How about some more?

So … it’s about to start a winning streak, he believes, that will last all year, it’s going to be the “key player” in its industry, etc. What’s the deal?

Well, not surprisingly, it’s all about energy — this is like many other teases, built on the increasing production of oil and gas in the US, the potential for exporting gas, the death of the coal fired power plant, and cheap

It stands at the junction between natural gas supply and demand … he says it is …

“The indispensable cog in the giant gas wheel that will power the US economy for the next century….

“The largest independent owner and operator of natural gas storage assets in North America ….

“uniquely positioned to profit from the supply demand imbalance….

“it just went public in 2010….

“business is booming ….

“they’ve expanded storage capacity by 20% in 2011 ….

“We don’t have enough gas storage today to deal with anything other than a mild winter season … and there’s no time to build more….

“… revenues up 61% in the last year …. just 130 employees”

OK, so that’s probably enough clues for the Thinkolator … but don’t worry, I sat through the whole thing just to make sure.

He predicts that natural gas could spike because a cold winter could dramatically ramp up gas prices, which would help this company profit — a mild winter could provide 10-20% returns plus the 12.5% dividend … and a severe winter could make the stock double or triple. And he implies the stock will “guarantee” a 12.5% return in 2013 even if gas prices don’t move.

So there’s a high yield, the stock is around $11, barely half it’s IPO price, and it’s a “bargain” according to Perry — what is it?

Thinkolator sez: Niska Gas Storage Partners LLC (NKA)

Which is structured as and acts like a Master Limited Partnership, meaning it distributes the majority of its cash flow to unitholders and that a fair portion of that cash flow ends up being classified as return of capital so you don’t pay taxes on it until you sell and realize that capital gain. As with most MLPs that own long-lived infrastructure assets like pipelines and storage facilities, the depreciation eats up much of the accounting earnings but maintenance eats up far less of the real cash flow.

And the yield is indeed substantial, though it’s not currently growing — they have a stated goal of increasing the payouts over time, but they haven’t done it yet, the dividend has been 35 cents per quarter since they went public early in 2010. The pricing is a match, too — the shares are around $11 now and did go public at a much higher price in the high teens, then shoot past $20 for a brief while … so the effective yield is close to 12.5% now. Niska was a private equity-backed IPO (Carlyle and Riverstone Holdings still own a controlling stake as of the data I’ve seen), and it carries a big chunk of debt.

I haven’t looked at Niska very carefully yet, but they do appear to take pricing risk with at least a chunk of their “proprietary inventory” of gas, so I guess that’s where you find the potential boom from a big spike in natural gas prices, as Perry teases, and it’s also from whence came their inventory writedowns when pricing fell. From a quick glance at their cash flow statements, it does look like they are floating close to the edge of what they can afford with this 12.5% yield — they get their debt pretty cheap and they are expanding capacity so it may be that their revenue will climb, but it doesn’t look like it would take a lot of pain for them to be forced to cut the distribution. Or borrow money to pay it.

So that’s my two-cent look at Bryan Perry’s “Stock of the Year” for 2013 — it certainly rides a compelling trend (storage in high demand) and pays a high dividend, but it looks to me like they also have a lot of leverage and a balance sheet without a lot of “give” in it if things turn bad, which is, I suspect, why investors are demanding the relatively high 12.5% yield and why some analysts have downgraded the stock lately. And yes, many MLPs have been a bit soft with the fiscal cliff looming — perhaps because of fears that their tax advantages will be taken away in any “grand bargain” … though they don’t have to worry about the conventional dividend tax hike that’s already baked in to the law. It’s your money, though, so the important thing is what you think — sound like a worthwhile high-yield speculation for you, or not so much? Let us know what you think with a comment below.

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16 Comments on "“My Top Stock for 2013” (Bryan Perry)"

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Doc
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Doc
December 17, 2012 3:58 pm

A great buy if you specialize in catching falling knives.

OldPoop
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OldPoop
December 18, 2012 11:15 am
LOL, the term “catching a falling knife” must have been coined by the banksters to scare the sheeple away from doing exactly what they do. They buy the stocks being dumped by scared investors (that bought too high) in preset increments as it is falling, then they sell it back to the very same price chasers in preset increments as it is going back up. They have been doing this for generations, easy money. Natgas is in the dumps, and could possibly remain there for another 2 or 3 years, maybe longer. This is the time to be accumulating natgas… Read more »
jax
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jax
December 18, 2012 5:36 pm

I agree, what nat gas stocks do you like

OldPoop
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OldPoop
March 16, 2013 10:10 am
Sorry, just saw your question today. GLNG, TGP, and ETP for moving natgas, NKA for storage. LNG for its future potential, and ECA for my one and only gas in the ground company. LNG is my leap of faith stock. I’m hoping that in 2015 when they are up and running as the only export facility in the U.S. they will start paying dividends and become a multi bagger. But I have not bought any for a few months, hoping the price comes back down, it has gotten too popular for me at the moment. The natgas movers have been… Read more »
weaver22
Irregular
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weaver22
December 17, 2012 6:11 pm

I bought Niska a couple years ago based on a great story told by one of the financial newsletters I was taking. All that in-demand storage sounded great, but it just went down. Sold it at a moderate loss, glad I didn’t hang on to it.

Bill
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Bill
December 17, 2012 8:47 pm

Looked a year or so ago. Their storage was about 50% full at that time. The arguement among analyists was , did they have alot of room for expansion , or was usage dropping and the were going to be in trouble. The second opinion looked reasonable and I did not bite.

dennis
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dennis
December 17, 2012 9:24 pm

At least Perry is touting it at a much lower price, than when the bozos at Stransberry were saying it was the greatest thing since sliced bread. Right after that the wheels fell off.

baygreen
Member
32
December 18, 2012 3:51 am
Not about this teaser but an energy stock I purchased in November for $37.70 symbol HFC just got home late opening my mail got letter from Pershing my broker and it says Notice of Two for One Unit Split for Holly Energy PARTNERS,L. P. which is symbol HEP but the partnership includes my 500 shares in the split of record for Jan. 7 2013 to take effect Jan.16 2013. My question for any irregulars or Travis is I was going to sell this week in the mid $45.00’s and I also picked up a 20cent divy and a special 50cent… Read more »
Tim
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Tim
December 18, 2012 6:16 am
Maybe not a bad concept? I would look at Copano for the same story shorter term. CPNO will be completing their big cap Houston storage capacity build out in April 2014, so not much more than a year from now, before that becomes accretive. The LNG exports out of the US Gulf beginning shortly there after & should start to support gas pricing beyond that time period if only pshycologically at first to the North American gas market. Perry lost a lot of his credibility on his way too late call to “SELL” BP, post the Macondo well accident. That… Read more »
David Murphy
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David Murphy
December 24, 2012 3:57 am
Looked at Niska earlier this year and didn’t like the lack of shareholder rights. Carlyle/Riverstone choose the directors, executives and, among other things, they have the right to buy back all issued shares at whatever current market price prevails at the time they decide to buy them back. Stockholders are in the minority and have no right to protest any decision or policy made by the board. There were a couple of other things that also bothered me but I don’t remember what they were. Those people controlling the company may have boatloads of integrity but I wouldn’t buy anything… Read more »
yury
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yury
December 28, 2012 12:22 pm

The best stock for 2013 probably is STSI.If only a 10% of notice about this company are true stock price will climb;This stock was described in the past on gumshoe treating P Cox tease.

Darko
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Darko
December 28, 2012 3:34 pm

1. Arcam
2.POT
3 .CSX

Tom from BEL
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Tom from BEL
October 26, 2013 12:42 pm

you bought Arcam in 2012? i hesitated when it was 110 SEK; don’t chase it when it goes fast, they’ll have a pullback … I thought ….wrong! They ‘ve never stopped, now at a price of 922 SEK Damn! And this ride is not going to stop at any time soon.
I hope you bought a lot(

Dave
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Dave
March 15, 2013 2:07 pm
I too do have Niska and also a variety of other stock Brian Perry has recommended – many-that pay in excess of 10% annually. Most have also increase in quoted value by a good percentage too so the earnings are real – although normally the “dividends” are taxed at the “unqualified” or salary tax rate. I have most of them on a “DRIP” reinvestment program – which has built quite a nest egg. I read several sources but Brian Perry is a trusted read, but only one of many. These are good times to be an investing speculator.
Dave
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Dave
March 16, 2013 6:05 pm

I would like to read the comments Yury had about STSI, Star Scientific. I just bought a small lot of shares at the current low price of $2.00 share and a bottle of the pills to try it out. So far the pills seem OK – but too soon to see a positive effect – and the shares seem to be experiencing a “bear run”. If they can out live the shorts the shares should fly – Famous last words – we shall see!
Dave

Sam christen
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Sam christen
March 23, 2013 9:11 pm
Any comments on Atlantic power? (AT)–I bought 3000 shares of this utility on Feb 24 ,2013 Ai $12.00 And within a week had lost over $19,500. The company had said repeatedly over 18 months that the 10 percent dividend was solid, and many analysts recommended the stock of this UTILITY for us retires. They cut the dividend 65 percent, adopted a ” poison pill” shareholder rights item at a board meeting, and either bought or sold subsidiaries in Florida. The lawyers are circling, but we investors/shareholders have been horribly harmed by a lying CEO, CFO, and corporate board. They all… Read more »
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