Northern Tier Energy LP (NTI): Yet Another Risky Oil and Gas MLP – HollyFrontier Corp (HFC), McMoRan Exploration Co (MMR)

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With more than 5,400 stocks to choose from, the universe of investment possibilities is enormous, so looking for stocks based on what you already know and own might be a path to pursue.

Motley Fool CAPS, the 180,000 member-driven investor community that translates informed opinion into stock ratings of one to five stars, helps you focus your attention by providing you with a personalized Stock of the Day. Using its supercomputer, it looks at stocks currently in your active pick list and then scans stocks picked by highly rated players with lists similar to yours, as well as industries in which you currently have active picks, and targets areas in which you already have an interest.

Northern Tier Energy LPBy pairing up the opinions of some of the top investors in the CAPS community, CAPS provides you with a handful of companies on which to begin your own due diligence and research.

Buy what you know
No doubt based on my having weighed in on companies such as HollyFrontier Corp (NYSE:HFC), McMoRan Exploration Co (NYSE:MMR), and Cheniere Energyy, Inc. (NYSEAMEX:LNG) in the broad oil, gas and consumables sector that I rated to outperform the market averages, the CAPS supercomputer thought I also might be interested in Northern Tier Energy LP (NYSE:NTI) , an independent downstream energy master limited partnership with refining, retail, and pipeline operations serving the PADD II region of the U.S., districts created during World War II to ration fuel but still used today for data collection purposes.

It was one of five Stocks of the Day it offered up for my consideration this week, and though it offers a tempting dividend that currently yields 16%, just remember that as smart as the CAPS algorithm may be, it’s still just an algorithm. So be sure to look before you leap on any of its suggestions.

Northern Tier Energy LP (NYSE:NTI) snapshot

Industry Oil, Gas, and Consumable Fuels
Sector Energy
Market Cap $2.9 billion
Revenues (TTM) $4.5 billion
1-Year Stock Return N/A
Return on Investment N/A
Estimated 5-Year EPS Growth 25%
Dividend & Yield $5.08/16.5%
Recent Price $30.76
CAPS Rating ****

Source: FinViz.com. N/A = not available. Northern Tier Energy had its IPO on 7/26/12.

Pipeline to profits
Because of their high divided yields, master limited partnerships continue to be popular with investors looking for an easy way to generate income, particularly during periods like now, when the Federal Reserve is implementing monetary policy hat keeps interest rates artificially low. It almost seems too good to be true: The MLPs make a ton of cash every quarter, and they distribute it all to their unitholders. Wash. Rinse. Repeat.

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