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All American Pipeline (PAA)
now, most of you know that oil prices
have been on the rise and many oil and gas stocks like Plains All
Pipeline have been gaining some serious momentum in the past month or
so. MLPs have been especially attractive to
investors because of their eye-catching yields.
PAA owns and operates a
diversified portfolio of assets that play a key role in the movement of
and Canadian energy supplies. The
company handles over 3 million barrels per day of crude oil, refined
and LPG on average through an extensive, strategically located network
in select North American producing basins and transportation gateways.
Recently the company reported strong earnings and they expect to continue to deliver
Plains All American Pipeline is a fast growing oil and gas MLP that is
the largest independent midstream crude oil companies in North America.
They own and operate approximately 16,000
miles of crude oil and refined product pipelines, roughly 90 million
crude oil, refined products, LPG terminalling and storage capacity not
mention control a full complement of truck transportation and injection
A major hub of their business
is the Cushing OK terminal they built in 1993 which has been expanded
times its original size. Cushing is the delivery point for WTI (West
Crude) in the US and enables PAA to capitalize on their vast pipeline
A major part of PAA’s
expansion is through strategic acquisitions within both the oil and
sector. Their ability to terminal and
store these energy sources in conjunction with their supply and
logistics activities allow them to capitalize on inefficient energy markets and to
physical market imbalances, mitigate inherent risks and increase margin
At their last earnings report
on February 16th, Plains All American Pipeline not only beat the
Zacks Consensus Estimate by 4 cents, but gave a positive outlook for
year. The company is moving forward with
strategic asset purchases to expand operations like it did in 2010.
Zacks’ analysts believe that the acquisition
of certain BP assets, which should be completed this year, will boost
partnership’s midstream business through additional pipelines, storage
capacity, fractionation plants and supply contracts.
PAA is a large-cap (12.41 billion) company that is trading at about 17
(expectations for next quarter) earnings. Plains All American reported
fiscal year with revenues increasing across all segments. PAA
became a Zacks Rank 1 strong buy
on January 5th, 2011
American reported a quarterly revenue increase
of 6% at their last earnings report but saw a 16% leap in EPS for the
period. Annual sales were up 23% compared to (fiscal) FY2010
sales of roughly 34.3 billion in FY2011.
earnings increased from $2.40 in
FY2010 to $4.88 in FY2011 and is expected to earn $4.80
in FY2012 according to the Zacks Consensus Estimate.
Plains’ total revenue for 2011 was
$34.28 billion versus $25.89 billion reported in the prior fiscal year,
reflecting a growth of 32.4%. PAA has
had a record of strength surprising analysts to the upside 4 quarters
in a row at
an average of 24%. Of the 6 analysts who cover PAA, the
consensus is for the company to experience negative earnings growth of
the current year (FY2012) and increase earnings by roughly 6% in
will report Q22012 results on May 9th.
In terms of the magnitude of
analyst estimate trends, we are seeing all of the consensus estimates
than they were 90 days ago for the current and next quarters as well as
Market Performance &
Since hitting a low of $57.02 in October, it has almost been a straight
for the MLP. Recently it made a new 52
week high of $84.48, which is more than 48% higher than its lowest
now the uptrend continues, driven
by the rise in oil prices, which PAA will be closely tied to.
Support levels may come at the 50 and 200 day
moving averages of $77.11 and $66.25 respectfully.
has exceeded the S&P 500’s
performance in the past year by 22% and outpaced it by almost 12% in
the past 3
months as it climbed higher. The stock
remains in a bullish trend and has momentum behind it; it has led the
market by about 5% in the past month.
A Levy is the
Momentum Stock Strategist for Zacks.com. He is also the Editor in
charge of the
Whisper Trader Service.