Cash Machine’s Bryan Perry discusses the three factors that he thinks create a very bullish outlook for these stocks tied to the burgeoning natural gas market.

So what’s the triple play?

OK. Well, natural gas is at historically low levels right now.

Absolutely.

We’re talking below $3 per 1,000 cubic feet, MCF as they call it. It got down to $2.47 before we saw a little bit of a buying bump there. Certainly a lot of warm weather has a lot to do with that.

There are three things happening here that are really compelling. though. Natural gas is a domestic fuel, it’s clean, it’s green, it’s abundant and it’s here, OK?

We have a US military budget that has been certainly…it’s being reduced. You can’t fight a two-theater war any more overseas to secure a national interest in oil and gas. So we have to do something about that.

Are you T. Boone Pickens by any chance?

I do like the guy, I do like the guy. He’s got a heck of a football team.

So anyway, power plants are converting from coal to natural gas at a rapid rate right now. Massive transformation going on. American Electric Power (AEP) is on my list, as well as Duke (DUK). You know you’re starting to see a PPL (PPL) with big numbers.

Much cheaper inputs, much cleaner emissions. It’s friendly all around, and so you have the backing of just about everybody behind that trend. So very little barrier to that, and momentum not carrying further. That’s trend No. 1.

The second trend is, we’re now in the export business of natural gas. You know, gas prices in Japan and Korea are $13 to $15 per MCF. So what’s going on there is we are freezing gas in its liquid called LNG, liquefied natural gas, and they can do that by freezing it to minus 130 degrees Celsius. When you take it to a liquid form, you have 600 times more gas in the same space than you do when it’s gasified, right?

So the company I bought there is called Cheniere Energy Partners (CQP), and they have the only terminal in the US which is going online here in the next two years. They just got done building it.

They’ve already completely contracted out. It’s full capacity for phase one. The last customer was Kogas, which is the biggest natural gas company in the world. So they’ll be shipping this stuff over right around 2015, 2016, 2017, with 20-year contracts. Total (TOT) is another one, Chevron (CVX) is a third customer and a big Indian customer that I can’t pronounce the name.

Anyway, they’re sold out and the stock is paying their dividends now through debt issuance that they’ve had when their IPO came out. They had planned on that as part of the lead-in process before it was built and before shipment started going out the door.

But people are seeing it because they’re booking it up. It’s sold out capacity-wise. The disparity now is a matter of…

And those are floating-rate numbers. They’re not locking in at $2.50 gas forever. I mean if gas prices go up, they’re not going to be cornered into cheap gas prices. So that’s a moving target also. It has to be because it’s energy.

Anyway, I like that story. Cheniere, I bought in at $16, recommended at $16, and it’s currently around $21 or $22. It still pays a yield of around 9%.

Wow, nice.

I expect those dividends are fixed now, but they’ll start climbing rapidly as capacity moves out and they start moving this gas overseas.

So that’s the export market. That was only validated by the Department of Energy less than six months ago. The department came in and DOE said let’s get in on the export business, because they don’t want these mines to be shut in. You know, the drillers, there’s just so much capacity with Marcellus now.

Open up a shale place, yeah.

So that’s a big deal. The third play on this is nitrogen fertilizer. It’s called urea ammonia nitrate. That’s what you grow corn with. It’s the sole fertilizer for corn.

We have a huge corn subsidy involving the ethanol business. But the emerging markets now are going from rice and beans to corn-based products, especially the Latin Americas and South Americas, Central Americas. A lot of corn-based products around the world also. We just happen to be the biggest producer in corn in the world.

So that said, when your biggest component that goes into making nitrogen fertilizer is natural gas, and you have world-record corn prices at around $7 or $8 a bushel, and you have the cheapest input prices for natural gas of all time…OK? Your profit margins are out to here.

The cleanest play, the purest play, and the most dynamic play is the company that went public here less than nine months ago. It’s called CVR Partners (UAN), and it’s an MLP. The symbol is UAN just like the chemical itself, the byproduct, and it came out at $17, five times oversubscribed.

The thing about Terra Nitrogen (TNH) is that it had been such a big winner, the only publicly traded partnership in front of that. But it’s a $200 stock, thin float, and a lot of people don’t want to trade $200 stocks even though it’s been a big winner for us. So CVR Partners came out and hence the big move in fertilizer prices.

Now the stock is trading up to around $30 in this market. The S&P was flat last year, and the stock nearly doubled. It keeps raising the dividend every quarter, so it still pays about 9%. That gives us three ways to play in a powerful, in cheap natural gas.

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