On Mar 19, 2013, Zacks Investment Research upgraded
Exterran Partners L.P.
) to a Zacks Rank #1 (Strong Buy).
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Why the Upgrade?
The partnership reported earnings surprises in the last three
quarters with an impressive average beat of 57.2%. The long-term
expected sales growth of Exterran is poised at 25.27%. Exterran's
effective tackling of its debt level with simultaneous focus on
receiving high-return contracts and efforts towards
cost-management will drive the partnership to post another
Given the increasing developmental activities by natural gas
operators in the liquids-rich and shale basins, the demand for
the partnership's products and services has jumped, thereby
fetching profitable returns. Moreover, the continued market
growth of gas lift applications on secondary oil productions has
further lent upside to earnings.
The partnership has a handful of key projects in Brazil, Mexico
and the Middle East. Its capital outlay plan of $425.0 million to
$450.0 million for 2013 and strong backlog of orders of $1.07
billion bear testimony to the fact that the partnership is
generating adequate returns from its investments.
Exterran has recently increased the quarterly distribution rate
by 2% to 51 cents per unit. The annual yield now comes to 8.18%,
substantially higher than the industry average. The partnership
witnessed strong distributable cash flow in 2012 which increased
30.7% to $118.0 million from $90.3 million in 2011.
However, limited activities in the dry gas area and uncertainty
regarding retroactive rate increase might act as headwinds.
Other Stocks to Consider
Other oil as well as gas products and service providers who are
presently performing well and have a Zacks Rank #1 (Strong Buy)
Compressco Partners, L.P.
). Zacks Ranked #2 (Buy)
Core Laboratories NV
) is also worth a look.