By Bret Jensen
Linn Energy (LINE) has had a challenging six months to say the least. Barron’s has questioned some of its accounting practices numerous times which has been the main catalyst (the other being the rising interest rates of May through September) behind the stock’s substantial decline earlier this summer.
However, it appears the worse is over for this high yielder. Recently the company has had several positive catalysts and seems poised to reclaim the loss of stock market valuation that occurred over the summer. Its capital appreciation potential and high yield make LINE an attractive pick up for patient income investors.
- Earlier in the week, the company reported solid results that came in above expectations.
- This prompted Raymond James to state Linn “has finally turned the corner” especially given the company produced $2 million of net cash in excess of what it paid in distributions.
- RBC Capital also commented on the solid production growth in the quarter and has an “Outperform” rating and a $38 price target on the shares.
- Its recent acquisition of ~$500mm of Permian assets should add 10 to 15 cents annually to its distributable cash flow.