Suburban Propane at 7.65%, Bobby?

"For comfort, warmth and convenience, your family, your farm, or your business can depend on the experience of Suburban Propane."

We owned SPH a few year ago, until it's p/e started to look upsidedown and generally TGTBT for our taste, and we blow out for a better deal (I believe it was a certain bulk shipping company and Seth Glickenhaus selection). Today, as we applied hoe to earth, we've uncovered it again. Whether or not it's a case of a bad penny is an open questions. SPH just raised it's dividend, and now yields 7.65%, and has reported a good quarter. They also announced that they'll be buying out their general partner's incentive shares for a big chunck of ordinary shares.

Smartmoney places SPH in odd company, with a group of stocks that draw earnings from consumers in various ways (from selling dog bones to boats) such as Petsmart, MarineMax, Tractor Supply Cp., Petco, and the massively shorted Overstock.com (the beat down website trying to buy household name status with the super tacky TV commercials). In that neighborhood, it turns out SPH looks good. Net margins are 4.40, with a five year growth rate estimate of almost 20%, a modest looking forward P/E of 13ish, and a PEG ration below the bogey, 1. It's beta appears freakishly low, blow .05, which is nice tonic to the motion of the S&P. It's price to cash flow comes in 4th in this group of 2 pet stores, a boat dealer, a tractor company for ping dingers, and a website that sells leftovers. But does that make this company's dividend safe? As Dustin Hoffman was once asked by a man holding a drill to Dusty's teeth: "is it safe?".

If so, it's 7.65% yield looks tempting in relation to the alternatives. But maybe it's a better to wait for a dip than rush right in and be one. A quick look at the site shows them set up to deal on the east and south west coast, but not many places in between; and they are selling franchises, which is a good way to generate ongoing earnings. Room to grow, perhaps.

The SPH chart looks fairly in the middle, about half way between Mr. Bollinger's bands, and its 70 day moving average is around 32, so to lock in a better deal, it needs to come down a few points from the 34 level, where it trades today. Wait for a dip (which will increase your yield) and keep a close watch on it (ie, a tight stop loss order) and it should offer a better than average return with regular compounding interest in an age of buybacks when Warren talks to Bill and Bill thinks it over, announces it, and actually feels like buying his company's stock.