Calumet Specialty Products Partners LP (NASDAQ:CLMT) — This leading producer of crude oil-based specialty lubricating oils, solvents and waxes was first highlighted in the Trade of the Day on Feb. 19 near $37. The company had exceeded Q4 earnings estimates, and the quarterly distribution per unit was increased to $0.65, or $2.60 annually.
S&P has since raised its estimated annual distribution to $2.70 per unit in 2013, which at the current price is a yield of 7.23%. S&P said, “Recent refinery acquisitions should help the partnership access discounted crudes coming from the Mid-Continent and Canada.”
Zacks upgraded the stock to a “strong buy” on March 13, saying it “boasts an impressive long-term earnings growth rate of 25.32%.”
Calumet broke from a cup-and-handle formation on Feb. 8, followed by a confirming breakaway gap and ran to a high of $40.25.
On Tuesday, the company offered 5.25 million shares priced at $37.50, a 4.1% discount to Monday’s close. The closing price fell in line with the offering and is above its intermediate support line at $37. Calumet said that it intends to use the net proceeds of the offering “for general partnership purposes, including working capital, capital expenditures, acquisitions and potentially the redemption or repurchase of outstanding notes.”
With a price objective in the low $40s and a projected distribution rate at over 7%, CLMT could provide a total annual return in excess of 20%.