Energy prices are beginning to firm up again. And one opportunity we see in this sector is NuStar Energy (NS).There has been heavy insider buying here. Insiders have purchased 622,000 shares of NuStar during the last six months. They have sold exactly none.
Last month, for example, Director William Greehey of NuStar purchased 350,000 shares at $65.55, an investment of nearly $19.8 million. Directors Rodman Patton, Dan Hill and Jesse Bates have bought lately, too.
Recall that NuStar is a publicly traded limited partnership with 8,417 miles of pipeline, 82 terminal facilities, four crude oil storage tank facilities, and two asphalt refineries with a combined capacity of 104,000 barrels per day.
It also is one of the largest asphalt refiners and marketers in the United States and the second-largest independent liquids terminal operator in the nation. It has operations in Canada, Mexico, the Netherlands, and the United Kingdom, too.
The partnership’s combined system has more than 91 million barrels of storage capacity, and includes two asphalt refineries, refined products terminals, a petroleum and specialty liquids storage business, as well as crude oil storage facilities.
In the most recent quarter, earnings fell 50%. But sales rose 49%. And the company will be solidly profitable for the full year. NuStar will earn $3.40 a share this year and nearly $4 a share next year.
Director William Greehey clearly is taking an optimistic outlook, too. He not only invested nearly $20 million recently. He also owns another 900,000 shares.
He recognizes that the BP spill has put the whole energy sector under pressure. But the oil transportation and storage business is not going away. Pipelines and terminals remain the cheapest and most efficient way of transporting energy.
I expect substantial capital appreciation here in the weeks ahead. Plus, NuStar is currently yielding 7.5%.We stopped out of this stock a few weeks ago with a small profit. But I think we can trade it again for a bigger one.
So buy NuStar Energy (NYSE: NS) at market today. And place a protective stop at $47. If you prefer to play this one more aggressively, try the December $60 calls. The options last traded at $1.60.
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