NuStar's Assets Create A Defensive 9% Yield

I'm not a Wall Street Analyst - I'm a pipeliner that specializes in financial analysis, forecasting, and project analysis. I only play an engineer on TV. My world normally revolves around North Dakota crude midstream assets, so I will not claim to be a subject matter expert outside that area. This company's assets and cash flows are highly defensive in nature. It has organic growth and distribution growth, slow but steady. The stock price appears undervalued compared to peers.

NuStar Energy LP (NYSE: NS), the focus of this article, has a very wide footprint and I will only seek to share what my limited mental faculties see in their asset portfolio. For me, assets are king, but there is a huge spectrum of asset quality in the midstream world. The value of midstream assets are generally derived from location, connectivity, and flexibility afforded to the customer. NuStar has many outstanding assets that are highly integrated, and in many cases, cannot be economically replicated by another party. For those not familiar, NuStar was spun off from Valero (NYSE: VLO) (the largest independent refiner) starting about fifteen years ago. As such, many of NuStar's assets were built to service Valero's refineries and benefit from "demand pull," not "supply push."

Source: Seeking Alpha

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