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| | | 10/21/2014 By Thomas Scarlett 
Some markets are inherently more competitive than others. One of the toughest is convenience stores, since the barriers to entry are so low and there's no highly specialized knowledge that you need to get started in the business. But the convenience store market continues to grow, as Americans lead increasingly hectic lives and come to rely more and more on the kind of staples and brand-name products you can find at your local store. One of the most successful firms in this space is Casey's General Stores (NASDAQ-GS: CASY). The name is not particularly familiar to residents of the Boston-to-Washington axis where most media types live, but the company is well established in the American heartland and has strong growth prospects. Casey's operates about 1,800 convenience stores in 12 Midwestern states. That's a fraction of the size of market leader 7-Eleven,which has almost 50,000 stores in 16 countries. But by concentrating on what it does best, Casey's has amassed a strong balance sheet. The success of Casey's is not strongly based on gas station revenues. That's a good thing because, as you probably know, oil prices and refined products have been tumbling in recent weeks and as yet there is no bottom in sight. Casey's recently reported earnings per share of $1.34 for the first quarter of fiscal 2015 ended July 31, 2014, compared to $1.43 for the same quarter a year ago. "Strong sales helped offset a $7.2 million reduction in renewable fuel credit values, which impacted earnings per share by almost 12 cents," said chairman and CEO Robert J. Myers. "We are off to a great start on our annual goals, and we were able to grow inside gross profit dollars by 12.9% compared to the first quarter of last year." What about groceries and other merchandise? Casey's annual goal is to increase same-store sales 5.3% with an average margin of 32.1%. For the quarter, same-store sales were up 7.7% with an average margin of 32.5%. "Sales were strong throughout the entire category during the first quarter," stated Myers. "We experienced slight margin pressure compared to the prior year due to cigarettes, but still grew gross profit dollars by 12.5%." Gross profit for the quarter was $155.7 million and total sales were $478.6 million. As for prepared foods, the goal for fiscal 2015 is to increase same-store sales 9.5% with an average margin of 60%. For the quarter, same-store sales were up 11.1% with an average margin of 59.9%. "The strategic price increases we implemented at the start of the fiscal year, along with various operational initiatives, are having a positive impact on sales," said Myers."Commodity cost pressures, such as cheese and meat, pulled down margin relative to last year, but overall, we are pleased with the gross profit dollar gains made in this category." Gross profit increased 13.4% to $116.5 million, and total sales for the category were up 17.1% to $194.6 million. For the most recent quarter, operating expenses were $244.3 million compared to$216 million for the first quarter a year ago, up 13.1%. The majority of the operating expense increase is related to new and replaced stores, recent store acquisitions, and the various initiatives the company is rolling out. Management is aiming for more growth as the economy expands. The company's annual goal is to build or acquire 72 to 108 stores and replace 25 existing stores. As of the end of the quarter, the company had opened 7 new stores and acquired 25 stores. "We completed the Stop-N-Go transaction in May and the integration of that chain is going very well," said Myers. "We will continue our disciplined approach to acquisitions as the industry continues to consolidate." The company currently has 35 new and 17 replacement stores under construction. Additionally, the company has eight store acquisitions, 35 new sites, and 35 replacement sites under contract to purchase. The company does derive some of its revenues from fuel, and has a plan of action in place. The company's annual goal is to increase same-store gallons sold 1% with an average margin of 15.3 cents per gallon. For the first quarter, same-store gallons sold were up 3% with an average margin of 19.6 cents per gallon. Despite the reduction in renewal credit values, fuel margins are ahead of expectations so far this year. Total gallons of gasoline sold for the quarter were up 8.8% to 464.2 million gallons. The firm's price-earnings ratio is a very reasonable 22, and its market cap is approaching $3 billion. It may not be a household name in your neck of the woods, but Casey's has a consistent record of performance in a very competitive business. Tom Scarlett is an investment analyst at Personal Finance. | | |
From 1968 to 2010, if you invested $10,000 in the market, you would have a nest egg of $637,408. Not too bad. But Wall Street researcher James O'Shaughnessy discovered that if you invested the same amount in high-yielding utility stocks that scored well on a handful of valuation factors, you would have a whopping $5,716,872!
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Today, a hot new phenomenon is storming across households all over the country, and it's creating a $600 billion market. It could keep utility stocks as reigning champions of the stock market. It has nothing to do with green energy… a new grid… or new pipelines.
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| | | 10/21/2014 By Robert Rapier 
It's been a good year for MLP IPOs: the next one will make 2014 the third most active after last year and 2006. 
Source: Alerian Three new MLP IPO registration statements recently filed with the Securities and Exchange Commission (SEC) make it very likely we'll get there, despite the recent market volatility. Columbia Pipeline Partners (expected to list as CPPL) filed to raise up to $800 million in an IPO, which would be one of the largest initial offerings ever for an MLP. The partnership will begin as a subsidiary of the natural gas distributor NiSource (NYSE: NI), which plans to spin out CPPL's general partner in mid-2015. CPPL will not own particular assets dropped down by its general partner, but rather a rising percentage stake in an operating company representing the entire business. This includes 15,000 miles of strategically located interstate pipelines extending from New York to the Gulf of Mexico, one of the nation's largest underground natural gas storage systems, and related gathering and processing assets concentrated in the fast-developing Marcellus and Utica shale basins. Revenue is projected to grow based on projects worth approximately $4 billion that are expected to be completed by the end of the first quarter of 2018. Last year, 93% of Columbia OpCo's revenue was generated under firm contracts. For the year ending Sept. 30, 2015 Columbia OpCo is projected to generate $620 million in adjusted EBITDA, of which the estimated cash available for distribution from the 14.6% limited partner interest of Columbia Pipeline Partners LP is projected to be $65.7 million. Athens, Greece-based Costamare Partners (expected to list as CMRP) is a growth-oriented MLP carved out of Costamare (NYSE: CMRE), an international owner of containerships. The $100 million IPO will be the first MLP focused on container ships, though Navios Maritime Partners (NMM) added several of these to its mostly dry-bulk fleet last year. Costamere will initially drop down four modern containerships with an average capacity of approximately 9,000 twenty foot equivalent units (TEU) and an average remaining charter term of about 6.7 years. The charters of these four ships expire between 2018 and 2023. Costamare Partners will have the option to purchase 10 more vessels from its parent within the next 12 months, and has options on joint venture interests in nine others. In 2013, net income attributable to Costamare Partners' predecessor was $14.97 million.The partnership projects that in 2015 net income will increase to $29.12 million, and cash available for distribution will be approximately $34.2 million. As with most partnerships with significant foreign or marine operations, Costamare Partners has chosen to pay taxes as a corporation, which means distributions will be 1099 income. (To better understand why a partnership would elect to be taxed as a corporation, see Marshalling the Marines.) Houston-based PennTex Midstream Partners was founded earlier this year, and plans to go public (under the PTXP ticker) by year end. Its sponsor, PennTex Development, was formed by Natural Gas Partners (NYSE: NGP) to develop a multi-basin midstream growth platform. The partnership's initial focus will be on organic growth projects in partnership with oil and natural gas producers affiliated with NGP. Initial assets of the $150 million IPO will consist of the following: -
Lincoln Parish Plant: a 200 million cubic feet per day (MMcf/d) cryogenic natural gas processing plant in Lincoln Parish, Louisiana. -
PennTex Gathering Pipeline: a 30.5-mile rich natural gas gathering system that will provide producers access to the Lincoln Parish Plant and to the Minden Plant owned and operated by DCP Midstream Partners (NYSE: DPM), with available capacity of at least 400 MMcf/d to the Lincoln Parish Plant and 50 MMcf/d to the Minden Plant. -
PennTex Gas Pipeline: a one-mile natural gas header with 400 MMcf/d of capacity that will provide market access for natural gas from the Lincoln Parish Plant for delivery to multiple intrastate and interstate pipelines, including pipelines that provide access to the Perryville Hub and other markets in the Gulf Coast region. -
PennTex NGL Pipeline: a 12-mile NGL pipeline with a total capacity of over 36,000 barrels per day, which will connect the Lincoln Parish Plant to the Black Lake Pipeline owned and operated by DCP Midstream, and will provide a Mont Belvieu-based market for NGLs produced from the Lincoln Parish Plant. For the 12 months ending March 31, 2016 PennTex Midstream Partners projects adjusted EBITDA of $38 million, and $36.4 million in distributable cash flow. This article originally appeared in the MLP Investing Insider column. Never miss an issue. Sign up to receive MLP Investing Insider by email. | | |
Over the past 40 years, small-cap stocks have delivered 175% better gains than large caps. And that trend is intensifying. In the '80s, small caps began to pull away from larger caps. In the '90s, the separation only increased. But in the 2000s, the gap really exploded. By the end of the decade, $1 invested in small caps had turned into $88. Compare that to $32 for large caps.
This trend is intensifying – with no end in sight. Small caps now outperform large caps by a whopping 352% – and climbing. To jump on this profitable growth trend, click here.
| | | 10/17/2014 By Martin Hutchinson "Jacob, I can see that for you being a Wallenberg means never having to say you're sorry." I said coldly to the young intern, who had just made a complete mess of a mailing and was blaming my excellent assistant for the disaster. It was a good line -- paraphrased from the 1970 movie "Love Story"-- but it was a bad career move. It ended any hopes I may have had for a career at the top of Swedish industry, because that intern was the heir to the Wallenberg family, which owns minority but controlling interests in many top Swedish companies. And now, 30 years later, Jacob Wallenberg is boss of the industrial empire. People think of Sweden as a heavily Socialist country with very high taxes and few rich people, and assume that Swedish industry must lack ambition and innovation. But right now Sweden has the best "country yield"---the dividend yield of a basket of a country's top corporations---than any company on the European continent. The iShares MSCI Sweden Fund (NYSE:EWD) currently yields a generous 3.7%. That's not as high as the yield of our two Global Income Edge portfolios, but it's impressive given the 1.8% yield on the Standard and Poor's 500-stock index, and it's from a country whose economy is growing faster than the U.S. economy. And at 16 times trailing earnings, it's reasonably priced. Not bad for a "socialist paradise," as Sweden is sometimes called. For two reasons, there's a lot more to the Swedish economy than meets the eye. First, since the 1930s the Wallenbergs, a capable and aggressive dynasty, have controlled much of Swedish industry (through charitable foundations). Second, since a financial crisis in the early 1990's, tax and other reforms have made even the non-Wallenberg sectors of Swedish industry much more capitalist. Because of this the top Swedish rate of income tax, once well over 70%, is now down to 56%, when you add in municipal taxes. The country still has a large state sector, at 52% of GDP, but that's smaller than France's, for example. Charitable foundations, holding companies and two-tier voting structures are the key to continued Wallenberg control in an era of high taxation. Since foundations, being charitable, don't pay tax, Wallenberg control is preserved. The family can't wander around the world on gigantic yachts like billionaires who own their assets directly, but they still live pretty well. Wallenberg family domination has on the whole been good for Swedish industry. Marcus Wallenberg (1899-1982) was a business genius, and while Peter Wallenberg, the intermediate generation's leader, was a bit lazy, I have to admit through gritted teeth that Jacob, the current boss, is at least capable, and takes a useful, long-term view. To be fair, the last 20 years of Sweden's economic opening have reduced Wallenberg domination. Of the top ten holdings of the iShares MSCI Sweden Fund (NYSE:EWD), which invests to match the MSCI Sweden Index, only four (L.M. Ericsson, Skandinaviska Enskilda Banken, Atlas Copco and Volvo AB) are now controlled partially or wholly by the Wallenbergs. Of the other six, three are banks, with the largest, Nordea, a primarily Norwegian bank that is now dominant in the Scandinavian region. The other three are Hennes & Mauritz, Sweden's largest retailer, Assa Abloy, the world's largest lock manufacturer, and Teliasonera, a merger of the Swedish and Finnish privatized telecom companies. Sweden's economy is doing pretty well, which is to say very well by European standards these days. The International Monetary Fund projects 3% growth for 2014 and 3.3% growth for 2015, third fastest among the 28 countries in the EU, just behind Ireland and Poland. As with the United Kingdom, maintaining its own currency has helped Sweden's economy by letting the country steer clear of the Euro's instability. In most respects the Swedish economy resembles Germany's, with a heavy orientation towards specialty manufacturing and a high level of engineering skill and product quality. The iShare Sweden fund's high yield results from an important cultural difference: Swedish top managers are less well paid than U.S. CEOs, and don't receive such generous stock options; so they remain more shareholder-oriented, paying out more earnings in dividends rather than share buybacks. Given its merits for yield, growth and international diversification, the iShares MSCI Sweden Fund is an good place for income-oriented U.S. investors to place a portion of their money. This article originally appeared in the Income Without Borders column. Never miss an issue. Sign up to receive Income Without Borders by email. | | |
The Internet is about to change your life – again! We're calling it the Next Wave of the Internet. Companies will spend $788 billion in the next four years just on one leg of the wave. It's the next big thing and could make early investors rich.
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