Is SHLX a Buy?

Forward to a Friend Having trouble viewing this issue? Click here. Refer a Friend to Energy and Capital.

Turn $1,000 into $10,000 Right now, one company holds the key to a MASSIVE oil deposit right here in America... Its shares trade around $1. But don't expect that to last much longer. In fact, experts project that this stock should be trading at 10 times its current value in just a few months. That means every $1,000 you put in would turn into $10,000; every $10,000 you put in would be $100,000, and so on... But if you wait too long, you could miss out on this under-the-radar fracking stock. Click here for all the details — before it's too late. Is SHLX a Buy? By Alex Martinelli | Monday, October 27th, 2014 In February of 1907, two competitors merged to form a behemoth oil company. The companies were the Royal Dutch Petroleum Company and the “Shell” Transport and Trading Company. Combined, the two businesses went by the name Royal Dutch Shell. The conglomerate established a monopoly over the world's oil for much of the 20th century. By the end of the 1920s, Shell owned 10% of the world's tankers and 11% of its known crude oil supply. By exerting complete control over two phases of oil production — midstream and upstream — Shell engulfed unparalleled sums of profit as the age of oil hit its prime during World War I, World War II, and the post-war suburban sprawl in the United States.  Today, its storied history has allowed the giant company to own downstream, midstream, and upstream operations from Nigeria to the Arctic Circle and in just about any other resource basin you can think of. So it may be strange to hear that the company plans to revert to its pre-1907 status... this year. Advertisement The Million-Dollar Magic Trick Imagine the insane profit potential that would arise for a company that could convert air, sunlight, coal, and even water into gas. Well, you don’t have to imagine. Because one company has recently discovered how to do it. The company is already up 100%... and that's just the beginning of what I believe will be an explosive run over the next several months. I'm thinking 1,000%... 2,000%... even 10,000% wouldn’t be out of the question. Thing is, you better claim your stake in this company right now before the true run starts. 19th Century Business Model? In June, Shell announced it would spin off its midstream company, Shell Midstream Partners, with an IPO that would raise about $750 million. However, last Monday, Shell Midstream — which plans to trade on the Nasdaq under the ticker symbol SHLX — announced a change of plans. In an SEC filing, the company upgraded the value of the IPO to $950 million split among 37.5 million common shares priced between $19 and $21. Underwriters will have the option of buying an extra 5.625 million common shares, which means the "limited partners" in this MLP could own anywhere from 27.2% to 31.3% of a company that's been around for more than a century. I should be clear: Shell and Shell Midstream will not be two completely different companies. The parent will still own at least 68.7% of the midstream business when it's all said and done.  Still, many analysts have called this IPO historic since Shell is a massive company that's diving headfirst into the red-hot MLP market. And while I wholeheartedly agree with these analysts, one important question remains... Should you dive in headfirst and buy shares? The Pros Shell Midstream owns and operates a solid stable of pipeline assets in North America, most of which are in Texas, Louisiana, and Mississippi — the throat of the shale boom. The company also holds a working interest in the massive Colonial Pipeline system that runs from Texas to New York. Plus, the company saw solid growth during 2014, boosting revenue by 57% to about $80 million, while net income tripled. Because of its MLP structure, Shell Midstream Partners will distribute at least 90% of its earnings direct to shareholders, so you can expect to see a high yield. Beyond that, the intangibles like solid management and track record are mostly present. Even though I'm skittish when it comes to Big Oil, Shell has been — and probably will be — around forever, which is always an important factor. But based on the MLP market itself, I have some doubts. Advertisement A SIX-figure check... every month? Richard Dockery is collecting upwards of $100,000 every single month. The only effort he has to put into it is the short walk down to his mailbox every day. He calls it his "Mailbox Money," and it's made him a millionaire... It has nothing to do with dividends — just incredible investment opportunities worth six figures PER MONTH in some cases. That's how Richard has been banking a pro-basketball salary with very little effort. Click here to follow his lead. Final Verdict While the Shell Midstream IPO has a lot of good things going for it that would normally signal a buy, contextual factors have manipulated the soon-to-be stock. The growth in revenue and net income over the year happened because in the previous year, the company suffered losses for environmental cleanup at a spill. Any undue attention, especially a spill, can slaughter an investment, so I don't know how much confidence I have in management's ability to mitigate these risks. Also, the MLP market has been blowing up... Last year, we saw 19 new master limited partnerships debut, and this year, several more have debuted or been announced as companies look to avoid corporate income taxes and investors search for lucrative high yields. Dominion, another major, is planning one, while Hess announced one a few months ago.  But with a finite number of investors searching for high yield, more MLPs jumping into the mix will dilute the pool of money investors plan to pour into the companies. So it is imperative, especially with oil prices hovering near $80 per barrel, that MLP investors find an investment that will stand up to fluctuations in price and a dilution of share value. Because of this, your editor has decided to approach SHLX with a wait-and-see attitude. I'm not going to buy it on the IPO day, but I could buy later if its performance stays at a high level. I would suggest you do the same. Good Investing,  Alex Martinelli With an eye squarely focused on the long-term, Alex Martinelli takes the art of income investing to a higher level within the energy sector. His research has helped hundreds of thousands of individual investors identify well established companies that have a long history of paying out dividends to their shareholders. For more info on Alex, check out his editor's page. I liked this article | I did not like this article Follow Energy and Capital on The Bottom Line Related Articles Investing in Nuclear Fusion 2015 Natural Gas Forecast Investing in Energy MLPs Investing in Energy Volatility Recently... Nothing Burns Like the Cold 5 Solar Stocks to Own for 2015 261% Gains New Natural Gas Breakthrough How to Stay Ahead of the Oil Panic

This email was sent to ignoble.experiment@arconati.us . You can manage your subscription and get our privacy policy here. Energy and Capital, Copyright © 2014, Angel Publishing LLC, 111 Market Place #720, Baltimore, MD 21202. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Energy and Capital does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law. Please note: It is not our intention to send email to anyone who doesn't want it. If you're not sure why you're getting this e-letter, or no longer wish to receive it, get more info here, including our privacy policy and information on how to manage your subscription.