On Jul 10, we issued an updated research report on
Ferrellgas Partners LP
). The partnership follows a strategic acquisition program to
expand its scale of operations. It usually buys assets having
similar lines of businesses, which are immediately accretive. In
addition, the partnership's current business diversification
initiative, a favorable liquidity position and payment of regular
cash distribution are important catalysts.
As far as Ferrellgas' inorganic growth strategy is concerned, in
the nine months ended Apr 30, 2014, it has completed six retail
propane acquisitions, taking the tally to about 248 to date.
On Jul 1, 2014, Ferrellgas acquired Mount Vernon, OH-based Wise
Choice Propane, an independently owned propane retailer. Earlier,
the partnership completed acquisitions of Kaw Valley Propane,
Viking Propane and several others.
This Zacks Rank #1 stock has effectively expanded its product and
service offerings through these acquisitions. They have also
provided a steady cash inflow. In the first nine months of fiscal
2014, the acquired units fetched around $1.5 million.
Ferrellgas is currently diversifying its business by entering into
salt water disposal services. In May 2014, the partnership acquired
fluid logistics provider, Sable Environmental, LLC. Sable is active
in the Eagle Ford Shale region of south Texas. In the future, the
transaction will enable Ferrellgas to expand its revenue stream.
Ferrellgas maintained a stable liquidity position backed by a
steady cash generation capacity. As of Apr 30, 2014, the
partnership's cash balance was $134.4 million while $600 million
was available under its secured credit facility. In the first nine
months of fiscal 2014, the partnership's operating cash flow was
Acquisitions apart, Ferrellgas also utilizes its funds for
maximizing unitholder value through the payment of regular cash
Key Picks from the Sector
Other stocks worth considering in the same sector include
Calumet Specialty Products Partners LP
Global Partners LP
Sprague Resources LP
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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FERRELLGAS -LP (FGP): Free Stock Analysis
GLOBAL PARTNERS (GLP): Free Stock Analysis
CALUMET SPECLTY (CLMT): Free Stock Analysis
SPRAGUE RESRCS (SRLP): Free Stock Analysis
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