Catch Some Black Gold with this Big FISH

Oil and gas are not going anywhere. In Monday’s Guide we featured and highlighted some prior picks as well as reiterated our strong opinion that this sector is still a great place to find winners, despite the selloff yesterday.

MLP’s (managed limited partnerships) offer a great way to invest in oil and gas pipelines but are usually closed off to the average Joe or Jane investor or trader. Marlin Midstream Partners, LP (NASDAQ – FISH - $20.17) is a unique play into the MLP oil and gas pipeline world. The Company operates through two segments: Midstream Natural Gas and Crude Oil Logistics and its customers include large exploration and production companies, large pipeline companies, and natural gas marketers. It provides natural gas gathering, compression, dehydration, treating, processing, and hydrocarbon dew-point control and transportation services to producers, marketers, and third-party pipeline companies; and crude oil trans-loading services. The Company also sells and delivers natural gas liquids to third parties.

FISH looks extremely attractive from a growth and earnings prospective. A forecasted 58% jump in revenue to $84 million from 2013 to 2014 puts the forward 12-month P/E at 15 versus the trailing 12-month P/E of 22. Operating and gross margins of 21% and 76% respectively versus the industry averages of 10% and 39%, only makes the bait on this hook more appetizing. Finally, technical momentum indicates a very bullish signal through the 50-day Daily Moving Average.

Look for FISH to make a 10-15% rise by mid to late 3Q.

All this glamour thrown at the oil and gas industry could be offensive to someone. In keeping with Monday’s Guide, we look north of the border to the NHL’s Edmonton Oilers and think they could be a potential target for a forced franchise rename as this could be offensive to ‘green’ environmentalists. Bum Phillips and the Houston Oilers are long gone here in the U.S.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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