Enduro Royalty Trust (NDRO) is poised for a distribution turnaround and strong capital appreciation, making this stock a good short-term trading opportunity with the potential to be a long-term option, says Ethan Bellamy, Senior Analyst at Robert W. Baird & Co. He pairs NDRO with Whiting USA Trust II (WHZ) when recommending specific U.S. royalty trust stocks.
“We also have ‘outperform’ ratings on WHZ and NDRO with very strong capital appreciation likely. We think that those are both pretty good short-term trading opportunities for a couple of reasons, mostly capital expenditures. Their distribution payouts have been lower recently, and we think that that’s likely to turn around,” Bellamy said.
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When the distribution turnaround happens, Bellamy believes that the stocks could benefit in the short run, and NDRO is one that investors could eventually own for the long term. He also says investors can benefit from NDRO‘s higher disclosure of information.
“After they go public, the availability of information on royalty trusts declines precipitously, so we have very good information and we know what the game plan is and what the assets look like at the time of the IPO, but thereafter investor communication on trusts is much more limited,” Bellamy said. “Enduro Royalty Trust (NDRO)…[puts] out an above-average amount of information relative to their peers.”
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