Realty Income Corp (O), Linn Energy LLC (LINE): 3 Stocks to Pick up Despite Buying Stampede

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Linn Energy LLC (NASDAQ:LINE): Stable, high-yielding oil and gas company

Linn Energy LLC (NASDAQ:LINE) is an independent oil and gas producer with a diverse asset base in the US. Its core focus is in the Mid-Continent (Kansas, Oklahoma, Permian Basin, Bakken, East Texas), Michigan, the Rockies and most recently California. The company has a balanced portfolio of both oil and gas, and it produces a nearly equal amount of each. Its strategy is to acquire long-life, high-quality assets, squeeze as much production out as possible, thoroughly hedge that production to minimize risk and finally — to distribute maximum cash to shareholders. Linn Energy LLC (NASDAQ:LINE)’s market cap is $8.84 billion. Those who do not want a Master Limited Partnership [MLP] in their IRA may buy Linn Energy LLC (NASDAQ:LINE) under the symbol LNCO.

Linn Energy LLC (NASDAQ:LINE) is the most conservatively-hedged of the MLPs. The sale price for 100% of its production is already locked in through 2016 with all oil being sold at over $90 per barrel, which makes its marginal cash distribution coverage ratio of 1.1 times more secure. Linn is the best cash distribution-centered way to be involved in domestic energy production. Like Realty Income, Linn Energy LLC (NASDAQ:LINE) has never had to cut its distribution.

Despite the company’s best of breed status, the stock has really been down on its luck lately. After having its hedging policy questioned by a silly Barron’s article and issuing a straightforward response, Linn just hasn’t gotten much sustained traction to the upside. After falling substantially in the last week, the stock is now trading at $38.44 per share with a yield of nearly 8%.

Gold in SPDR Gold Trust (NYSEMKT:GLD) ETF (NYSEMKT: GLD) shares

Gold is a timeless investment if there ever was one. Many buy the precious metal as a hedge against inflation or just outright economic collapse. Over the last 18 months, the price of gold has gone nowhere despite central banks around the world effectively printing money. With recent news that the Bank of Japan will aggressively be buying assets with the goal of hitting a higher inflation target, all three major central banks now have a policy of quantitative easing.

I believe the fundamentals for gold are therefore strong and the recent drop in price since late 2012 represents a good chance to accumulate the asset. My favored way of buying gold is through the SPDR Gold Trust ETF, which is ticker symbol GLD. This ETF is flexible and easily traded with minimal trust expenses. While the physical gold is stored in an HSBC vault in London and not in your safe, the transaction costs here are minimal. Consider adding some gold to your portfolio.

Conclusion

Although stocks have had a huge run, there are still a number of great companies out there that can be bought for a reasonable price. I believe that Realty Income and Linn Energy are just that. Gold is also down substantially and can be picked up here, and the best way to do that is through the SPDR Gold Trust ETF, which is both secure and flexible.

Stay tuned

I will be writing entries on an almost-weekly basis, providing recommendations on great businesses that I believe can be bought at a good value.

The article 3 Stocks to Pick up Despite Buying Stampede originally appeared on Fool.com and is written by Casey Hoerth.

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