For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"Our favorite conservative pick for 2008 is natural gas transmission, storage, and distribution company Southern Union (NYSE: SUG)," says Bill Martin, editor of BullMarket.com.
"Over the last few years, Southern Union has transformed itself from a staid utility company to a faster-growing pipeline and LNG-centric company. The company recently announced plans to create its own master limited partnership (MLP) into which it will transfer a portion of its gathering and processing assets.
"Southern Union's stock has been under some pressure recently, as investors were disappointed that the company didn't sell its pipeline assets to another MLP after being offered a substantial premium to its purchasing price a few years ago. However, management believes these assets can create greater shareholder value over time as a standalone MLP, and we agree.
"We expect several catalysts to kick-in for Southern Union in 2008. Under the favorable tax structure of an MLP, the market should value Southern Union's pipeline assets at a much higher multiple than they are currently priced at.
"In addition, we are expecting LNG volume to begin picking up significantly next year. Southern Union owns the largest LNG importation facility in the US, and the beauty of its business model is that the company takes little commodity-price risk, and is thus largely a pure play on rising import volumes.
"Finally, a number of organic projects came online this year with more slated for 2008, which should drive earnings next year and beyond. Add it all up and we view Southern Union as a low-risk stock with nice upside potential."
New Facebook share structure hints at IPO
Before the bell: Futures higher ahead of housing, jobless data
Nuclear power is on the comeback trail
