Buckeye should rebound in 2018

Article Excerpt

BUCKEYE PARTNERS L.P. $48 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 146.6 million; Market cap: $7.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 10.5%; TSINetwork Rating: Average; www.buckeye.com) operates 9,700 kilometres of pipelines in the northeastern and Midwestern U.S. Its network pumps gasoline, jet fuel and other petroleum products. In the third quarter of 2017, the capacity utilization of its oil and gas storage facilities fell to 89% from 99% a year earlier. That’s mainly because rising production in the U.S. failed to make up for the reduced output in OPEC countries and Russia. In 2018, however, higher domestic production and a greater ability to export energy should increase the volume of gas and liquids flowing through Buckeye’s pipelines and storage facilities. The extra cash flow should also spur its distributions; the current annual rate of $5.05 a unit yields a high 10.5%. Buckeye’s earnings should improve from $3.41 a unit in 2017 to $3.86 in 2018. The stock trades at…