On Jun 12, 2013, we upgraded our recommendation on
Ferrellgas Partners LP
) to Outperform from Neutral. The partnership currently has a
Zacks Rank #1 (Strong Buy).
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Why the Upgrade?
There are several catalysts, which include Ferrellgas Partners'
favorable performance in the third quarter of fiscal 2013 and its
focus on customer retention and inorganic growth strategy. Also,
reduction in fixed overhead expenses as a result of improvement
in operational competence led to this upward revision.
In the third quarter of fiscal 2013, Ferrellgas Partners'
earnings per unit and revenues beat the Zacks Consensus Estimates
primarily due to the acquisition of Mr. Bar-B-Q and higher
propane sales volume on account of colder than normal
It is evident from Ferrellgas Partners' recent activities that
the partnership continues to follow steady inorganic growth
strategy. In this fiscal, the partnership has already completed
four acquisitions - Western Petroleum, Mr. Bar-B-Q, IGS Propane
and Flores Gas. This step is part of Ferrellgas Partners'
long-term strategy to grow as one of the top propane companies of
the nation along with expanding product portfolio.
Apart from investing in several projects, Ferrellgas Partners
also intends to maximize its unitholders' wealth in terms of
paying cash distributions at regular intervals. The partnership
paid $119.7 million as cash distribution during the nine months
ended Apr 30, 2013. This effort will enable Ferrellgas Partners
to attract new investors.
Other Stocks to Consider
Other stocks in the sector that are currently performing well
Alon USA Energy, Inc.
Enbridge Energy Management LLC
) with a Zacks Rank #2 (Buy).
Overland Park, Kan.-based Ferrellgas Partners LP is a leading
distributor of propane and related equipment in the U.S. The
partnership provides propane services to residential, industrial,
portable tank exchange, agricultural and wholesale customers.