Tuesday, January 12th, 2010
Three Value Stocks for A Long-term Investor
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Suburban Propane Partners, L.P. (NYSE:SPH), China Natural Gas, Inc. (NASDAQ:CHNG), and China Integrated Energy, Inc. (NASDAQ:CBEH) are three undervalued stocks that investors should take a look at for 2010.
Suburban Propane May Heat Up in 2010
Suburban Propane Partners, L.P. (SPH) markets and distributes a wide range of products meeting the energy needs of its customers. These products include propane, fuel oil, refined fuels, natural gas, and electricity in unregulated markets.
The company is organized as a partnership where its unitholders receive regular distributions of profit on a tax-deferred basis. The stock’s “dividend yield” stands at approximately 6.76% with a beta coefficient of just 0.41, yielding a strong risk-adjusted return.
In addition to the safe and steady “dividend” income, the stock has a price-earnings ratio of just 9.77x its trailing 12-month earnings with a return on equity rate of 57% over the same period. Finally, a recovery in energy prices should boost profits in 2010.
China Natural Gas Fires Up for the Year
China Natural Gas, Inc. (CHNG) is engaged in the distribution and sale of natural gas to commercial, industrial and residential customers in the Shaanxi Province of China. This is done through the company’s network of 120 kilometers of high-pressure pipeline.
The company is a great example of a rags-to-riches Chinese company that began as a penny stock trading on the OTC exchanges. And like other strong Chinese companies, the firm has a lot of cash sitting on a strong balance sheet with great growth historically.
Looking ahead, the company still trades at just 11.2x its trailing 12-month earnings despite 9.4% growth last quarter, triple-digit historical growth rates, and a 20%+ long-term projected growth rate. Meanwhile, several new projects in the works may provide a near-term catalyst.
China Integrated Energy Powers Up
China Integrated Energy, Inc. (CBEH) produces and distributes biodiesel, wholesales and processes heavy oil and finished oil products, and sells gasoline and diesel at retail gas stations in China through one wholly-owned and two indirectly owned subsidiaries.
The company has demonstrated an impressive 25.98% return on equity over the past 12 month period, and posted 15.1% growth during the most recent quarter. Meanwhile, gas station acquisitions and a continued eye for growth may provide a catalyst in 2010.
Despite its spectacular growth, the company continues to trade with a price-earnings ratio of just over 15x and a price-earnings-to-growth ratio of just 0.19. This suggests that the stock is substantially undervalued given its historical growth and future outlook.
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-- Written by Simon Monger
