On Jun 23, 2014, the units of Plains All American Pipeline, L.P. (PAA) climbed to a 52-week high of $58.77. Finally, the unit price was closed at $58.54, up around 0.8% from the previous day’s closing of $58.06. We believe that the partnership’s strong liquidity position, efficient cash generation capability, systematic investment in several ventures and regular cash distribution payouts have boosted the unit price.
Plains All American maintained a stable liquidity position. As of Mar 31, 2014, the partnership had total liquidity of $1,982 million, including available fund of $1,952 million under the revolving credit facilities and cash balance of $30 million. In addition, Plains All American showed its efficiency in terms of providing stable cash inflow through operating activities. In first-quarter 2014, the partnership had an operating cash flow of $822 million.
A strong financial position supported Plains All American’s steady expansion activities. The partnership has operations in many mineral-rich regions, including Eagle Ford shale, Permian and Williston basins, and Canada. In 2014, Plains All American intends to invest $1.75–$1.95 billion for its expansion projects. Currently, the partnership is advancing well towards its Mississippian Lime pipeline and Western Oklahoma pipeline projects. The scheduled completion of these projects will enable Plains All American to serve more customers.
Plains All American also follows an inorganic expansion plan. Earlier, the partnership completed several transactions, including completion of the merger with PAA Natural Gas Storage, L.P. and acquisition of the Canadian NGL business from a subsidiary of BP Corporation North America, Inc., a unit of BP plc (BP).
In addition, Plains All American continues to pursue an initiative to pay cash distribution at regular intervals. In May 2014, the partnership paid quarterly distribution of 63 cents per unit, up 9.6% year over year. Paying regular cash distributions will enable the partnership to retain investors’ attention on the stock.
Plains All American currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the sector include Magellan Midstream Partners LP (MMP) and Delek Logistics Partners, LP (DKL). Both the stocks carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment