(By Rich Bieglmeier) What sort of director buys nearly $24 million of the stock for which he sits on the board? A confident one, that's who. On September 9, 2012, NuStar Energy L.P. (NS) Director, William E. Greehey signed his name on a fat check for $23,980,600 worth of NS stock.
Just from dividends alone, Mr. Greehey will earn $2.1 million a year. There is no way he would get the same deal at the local bank.
No matter what you might have thought about NuStar prior to the super- sized insider buy, the volume of dollars grabs you by the collar, shakes you around a bit, while spitting and screaming look here!
Headquartered in San Antonio, Texas, NS is one of the largest asphalt refiners, marketers, independent terminal, and petroleum liquids pipeline operators in the United States. The company has 8,491 miles of pipeline, 89 terminal and storage facilities with more than 93 million barrels of storage capacity, The partnership has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.
Based on iStock's view of the pipelines company, the dividend yield is one of the most attractive parts of NuStar Energy. We also like that the master limited partnership is expected to grow earnings by 88% in 2013 versus 2012, from $1.49 to $2.80 per share. However, with a PEG Ratio of 5, iStock believes much of profit gains could be built in already. When compared to the industry norm on a price-to-sales-basis and price-to-book basis, shares are fully valued.
NuStar's stock chart, on the other hand, looks more appealing in the short-term. The stock price put in a double bottom at a touch below $49 after missing earnings to start September. The stock has been on the rebound since the underwhelming quarterly checkup.
We see initial resistance near the 50-day moving average of $51.77, and some more at $54. However, it will take some heavy lifting from Wall Street to get NS through the $54 barrier in our view; which brings iStock back to NuStar's dividend.
Dating back to July 19, 2001, the partnership has increased its dividend in no more than five quarters. For five straight quarters starting July 28, 2011, NS has paid out $1.095. The next dividend is due in November. If the payout remains the same, it will be the first time in more than a decade that shareholders receive the same amount for six consecutive quarters. Perhaps, a dividend hike is on the way?
Overall, iStock likes NuStar Energy L.P. (NS) as a high-yield play with some upside potential in the stock price and dividend payout. As long as oil demand remains high, and the shortage of pipelines and storage remains, iStock can envision a total return for NS in the neighborhood of 10% to 12% a year.