Plains All American Pipeline, L.P. (PAA) shows 15% total-return potential when looking at the company’s distribution growth, yield and potential stock appreciation, and PAA is also poised to benefit from its positions in the Permian basin and Bakken shale, says Daniel Katzenberg, Executive Director and Senior Analyst for Oppenheimer & Co. Inc.
“This is one of my favorite names. It has a lower yield, relatively speaking, at just about 4.2%, but the distribution growth is over 10% — so if you look at all in, you get 15% total-return potential, and it’s a very stable, well-run company. This is something that you can get excited about,” Katzenberg said.
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Plains All American has a very high leverage to the oil and liquids plays, and with their large footprint in the Permian basin and their recent rail acquisition up in the Bakken, PAA is positioned to benefit from growth in both areas, Katzenberg says.
“They have a big footprint in the Permian basin in West Texas, which has been attracting more and more capital over the last year or so, and they’re really poised to benefit from that growth. They also just recently announced a rail acquisition up in the Bakken, and I think as we go forward we’ll see Plains benefiting from the ability to bring Bakken crude toward the East Coast, which is a trend I expect to see going forward,” Katzenberg said.