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Niska Gas Storage Partners LLC (NYSE: NKA) Can No Longer Afford Its High Payout

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Niska Gas Storage Partners LLC (NYSE: NKA) at one time was a great way for investors to play the natural gas market.

The company is designed to pay back a high percentage of its cash flow, as its stock pays a $1.40 dividend that equates to a whopping 12% yield.

Unfortunately that won't be the case much longer. Niska's cash flow has stalled, and the company doesn't expect to generate enough cash in this fiscal year to maintain its dividend.

The problem simply is that the price for natural gas currently is cheap and it won't be headed higher anytime soon.

You see, to cover its basic costs, Niska needs the price difference, or spread, between current natural gas prices and January future prices to be about $1.00. Those spreads right now are around 47 cents – quite a fall from the January 2010 spreads of $1.50.

"[W]e anticipate weaker financial results of the full fiscal year ending March 3, 2012 due to continued deterioration in market conditions," Interim Chief Executive Officer Simon Dupéré told investors Nov. 3. "[W]e expect low seasonal storage spreads, combined with reduced volatility, to have a more pronounced negative impact on our financial results through the third and fourth quarters."

The stock is down 45% so far this year. It could rise again, when natural gas prices increase and improve the cost of storage – but that doesn't look like it's going to happen in the near-term.

Still, with the share price so low, it's not an ideal time for investors who are long on the stock to sell it.

That's why investors should hold Niska Gas Storage Partners LLC (**) – until U.S. natural gas prices rise again, making storage business models more attractive.

Natural Gas Storage a Tough Business – For Now

The United States has the largest natural gas storage facilities in the world. This allows it to easily capture cheap natural gas produced in the summer and store it for the peak winter months, when increased demand exceeds production and prices climb.

Niska Gas Partners provides over 204 billion cubic feet (bcf) of storage facilities, with an estimated additional 12 bcf of future storage being brought online in the near term.

But natural gas storage investments aren't very profitable – right now.

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Rising Food Prices Will Boost Debt-Free Mosaic Co. (NYSE: MOS) to New Highs

By , Money Morning - • Print | Email

With so many companies – and countries – choking on the combination of slow growth and massive debt, investors are finding that there's a definite formula for success.

You need to look for companies that have healthy cash reserves, a global presence in a high-growth sector, and whose shares are available at a bargain price.

I've already found one to help get you started.

I'm talking about The Mosaic Co. (NYSE: MOS), an agricultural leader that's positioned to benefit from the worldwide run-up in food prices.

Mosaic is the world's leading producer of concentrated phosphate and potash, two of the primary nutrients required to grow food crops.

One of the main reasons I really like Mosaic is that it has enough cash – $3 billion – to fund its own growth. It doesn't need to borrow from banks to continue generating profits from crop-nutrient sales.

That's a profitable niche, since global food prices are expected to increase 4% next year, and could climb higher on supply squeezes. Increasing food demand and poor harvests have caused sharp climbs in the price of corn and other crops. And those price increases have translated into higher prices for pork, beef and poultry. The profitable agricultural industry outlook is enticing farmers to grow more, and will create a steady profit stream for Mosaic.

Mosaic's shares recently hit a 52-week low; but don't let that price dip fool you: While the market is currently pricing Mosaic for a significant slowdown in earnings, the reality is far brighter. It's time to buy The Mosaic Co. (**).

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Vale SA (NYSE: VALE): This Emerging Market Mega-Miner Is Taking Production to Another Level

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You might think you know everything you need to know about Vale SA (NYSE: VALE), but you don't.

This is a company that, while big, is rife with hidden profit potential.

Vale is what I like to call a "mega-miner." It's best known as the world's largest iron ore producer, but few realize that it also controls railroads, ports and shipping fleets.

Indeed, Vale is a vertically integrated company with a diverse mix of assets that includes more than 6,000 miles (10,179 kilometers) of railroad infrastructure, eight seaport terminals, five general cargo ports, and two iron ore export terminals. Beyond that, it generates its own energy through hydroelectric power plants.

And better still, Vale has the internal capital to self-fund further development.

These characteristics imbue the company with major profit potential.

So Vale SA is an unequivocal "Buy" (**).

Taking Charge of the Iron Ore Market

Vale is the world's second-largest mining company, behind only BHP Billiton Ltd. (NYSE ADR: BHP).

It's the world's largest producer of iron ore, and the world's second-largest producer of nickel. And that gives the company significant leverage in the fast-growing economies of Asia, especially China.

Historically, Vale had to battle the added costs of longer-term production contracts and short-term shipping rates. But that's no longer the case.

Last year, iron ore pricing moved to short-term contracts based on the spot market — to the benefit of producers. And to combat shipping costs, Vale recently bought its very own fleet of large ore-carrying vessels. Now it controls its own shipping rates.

These new developments mean that Vale will no longer be held hostage to long-term production contracts or to short-term shipping rate demands.

Now that Vale has full control over its iron ore business, it can look forward to newer ventures. And it has a big-time market in its sights.

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Kinder Morgan Energy Partners (NYSE: KMP) Buys Out El Paso Corp. (NYSE: EP)

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On June 6, I identified El Paso Corp. (NYSE: EP) as a "Buy." The stock at the time was trading at $20.40 share.

Well, on Sunday (Oct. 16), Kinder Morgan Energy Partners LP (NYSE: KMP) said it would buy El Paso for $26.87 a share. That's a 32% premium to the price the stock was trading at at the time of my recommendation. EP stock yesterday (Monday) rose more than 24% to close at $24.45.

The Standard & Poor's 500 Index has slumped nearly 8% since June 6, so readers who followed my advice would have enjoyed a nice rate of return over the last four months, compared to the overall market.

The case that I made for El Paso back in June was a simple one: The company's assets were valued at less than the equivalent assets held by its peers. El Paso at the time was in the process of breaking itself into two parts, so it could unlock some of the trapped value.

Kinder Morgan recognized that, as well, and acted.

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Green Mountain Coffee Roasters (NASDAQ: GMCR) May Be Red Hot but It's Not a 'Buy'

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Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is one of the hotter stocks in the market right now. In fact, the stock is up 178% since the start of the year.

But if you know what's good for you, you'll steer clear. Green Mountain has shot up so high, so quickly that it has become a victim of its own success.

Let me explain.

Green Mountain started with a single café that roasted beans and sold coffee over the counter to customers in a small town in Vermont. Today, that same company is generating $2.3 billion of revenue.

To put that in perspective, Green Mountain has delivered double-digit net sales growth for the last 27 consecutive quarters. And, since the acquisition of Keurig, it has seen net sales growth of more than 39% for 12 consecutive quarters.

But while compounded growth is the key to long-term success, it also can become a drag on near-term profits.

Often a company feels it must continue to grow simply for growth's sake. And if that's the route Green Mountain takes, then it will find itself in the exact same place Starbucks Corp. (Nasdaq: SBUX) did a couple of years ago.

Indeed, Green Mountain has put so much emphasis on growth that high expectations could negatively impact the company's execution.

And in the economic reality of today, a company that has fixated on hitting lofty growth objectives could be setting itself up for a serious market disappointment.

So Green Mountain Coffee Roasters is "hold" – at least until global growth starts to rebound (**).

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Deutsche Bank AG (NYSE: DB) Will Be Crushed Under the Weight of Europe's Debt

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Frankfurt-based Deutsche Bank AG (NYSE: DB) is about to be critically wounded by the European banking crisis.

Don't get me wrong – it will survive the spiraling financial mess. Germany will defend it because it's the bellwether of big banking in Europe. It's their version of "too big to fail."

But as the continent's largest bank, it won't be able to escape unscathed from the capital crunch about to take over the European banking system.

So it's time to sell Deutsche Bank AG (**), before the region's financial system falls apart.

Europe's Coming Capital Crunch

Many European banks don't have enough money to survive a Greek default. They hold huge amounts of their home sovereign's debt, as well as debt of their troubled Eurozone neighbors. Any write-down of those holdings will slam their balance sheets.

These banks were already overleveraged when the financial crisis started in 2007, and they have relied on outside sources like the United States to maintain core capital ratios.

In the 2008 crash, the European banks turned to the U.S. Federal Reserve for trillions of dollars of liquidity injections. They also used sources like U.S. money market funds for short-term loans – commercial paper that matures in less than 270 days – to cover capital loaned out at longer maturities. In May 2011, U.S. money market funds had an average 40% of holdings in European commercial bank paper.

But then U.S. banks, afraid of the unfolding European sovereign debt drama, let these short-term loans mature. This brought the capital back home and took an estimated $350 billion in liquidity out of the European banking system.

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Yamana Gold Inc. (NYSE: AUY) Shines On as Gold Prices Continue to Climb

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You'd be hard-pressed to find a better investment than one that is fully funded through organic growth the way Yamana Gold Inc. (NYSE: AUY) is.

Yamana has no net debt, which means it has grown to the point it is self-funding its future development. This is a testament to the quality of the company's assets and management.

It's also extremely rare in the gold mining sector.

You see, gold mines take large capital investments and years of development to reach a positive growth point. But Yamana is already past that point, and its profits and share price will soar as it continues to expand.

Just look at the last time I told you Yamana Gold was a "Buy." It was one year ago and Yamana was trading at $11.26 a share. Since then it's climbed 15% while other stocks have tumbled. And that's just the beginning. Yamana will keep climbing as the share price gradually starts to account for the company's growth outlook.

So if you didn't buy Yamana Gold Inc. following my last recommendation, you should do so now as the company rakes in profits without worrying about debt (**).

Yamana Gold Inc.

Yamana has spent the last decade building a diverse portfolio of low-cost mining locations. The company currently operates six mines, with 50% of its production coming from Chile, 30% from Brazil, and 20% from Argentina.

This global operations mix has big benefits for Yamana. First, it reduces the geopolitical risk threatening some of the company's competitors. And secondly, the low expenses grant Yamana a negative production cost of $80 per ounce, once byproducts are sold and taken into consideration.

This means that with an average sell price of $1,509 an ounce, Yamana enjoys an average cash margin of $1,589 an ounce in what is normally an extremely expensive sector to produce.

I absolutely love this cash margin, which will get even fatter with Yamana's projected production increases.

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Southern Copper Corp. (NYSE: SCCO) Gives You High Yield, High Profit Potential

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Here's a company to get genuinely excited about: Southern Copper Corp. (NYSE: SCCO).

Why?

Because Southern Copper has world-class assets and high profit potential, but its share price has taken a dive amid all of the recent market turmoil.

I love to find a sound business whose stock price has been pummeled in the uncertain markets. It screams bargain and is a major buying opportunity.

And in this case, the fact that Southern Copper's stock price has dropped means its already-juicy dividend has increased. Currently the company's $2.48 dividend equates to a 9.5% yield.

Plus, it's consistent: Over the last five years, Southern Copper has averaged a payout of 83% of its after-tax profits.

Given all that, it's time to buy this high-yielding, high-quality mining company (**).

Southern Copper Corp. Outshines the Competition

Southern Copper Corp., founded in 1952, engages in mining, smelting, and refining mineral properties in Peru, Mexico, and Chile. It has the largest copper reserves of any publicly traded company, and last year mined more than 1 billion tons of copper. That means it is perfectly positioned to profit from increasing global demand for copper.

The company operates the Toquepala and Cuajone mines in the Andes Mountains located southeast of Lima, Peru, as well as a smelter and refinery in the coastal city of Ilo, Peru. It also operates underground mines that produce zinc, gold, and lead, as well as a coal mine that produces coal and coke.

Southern Copper's mines are estimated to have a productive life of about 80 years. That means 80 years of revenue from copper, gold and silver deposits.

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BP Prudhoe Bay Royalty Trust (NYSE: BPT) Offers Consistent 9.9% Yield as Oil Prices Climb

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With oil prices far from record highs, but expected to rise in coming months, it's time to examine oil-related investments – especially those with high yields.

The West Texas Intermediate (WTI) benchmark was approaching $90 a barrel two weeks ago, but has since slipped more than 7% due to concerns over the European debt crisis.

Recent oil price fluctuations also stem from crude oil supply issues. Libya's revolution trimmed production of light sweet crude normally destined for the European refining complexes. This has helped keep a floor under oil prices, while the global economies start to price in a slowdown in growth.

But prices won't stay down for long.

Paired with supply constrictions, growing global demand will again push prices over $100 a barrel next year. The International Energy Agency reports that worldwide oil demand will rise by 1.2% (to 89.3 million barrels a day) this year and 1.6% (to 90.7 million barrels a day) in 2012.

That's why I like this energy investment that pays a juicy dividend.

It's the largest conventional U.S. oil and gas trust, has assets in the largest North American oil field, and, best of all, it yields 9.9%.

That's pretty amazing when you consider that the U.S. government will pay you less than 2% per year to hold one of its 10-year bonds.

And as oil prices climb, that dividend will only get sweeter.

I'm talking about BP Prudhoe Bay Royalty Trust (NYSE: BPT), a high-yielding energy stock that's a "Buy" in this uncertain market environment.

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Buy Coeur d'Alene Mines Corp. (NYSE: CDE) - While Silver's On Sale

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Silver prices plummeted 17.7% Friday – their worst one-day loss since 1984 – to finish off a week that saw the "other" precious metal nose-dive 27%.

Silver was hardly the only casualty: Investors pulled money from stocks and metals in favor of cash, U.S. Treasuries and the U.S. dollar.

But here's the key point: This silver pullback won't last forever, and fleeing silver – or top silver stocks like Coeur d'Alene Mines Corp. (NYSE: CDE) – will prove to be a costly mistake.

As ugly as this week has been – and even if it carries over into this week, or even beyond – this will prove to be just a temporary reversal.

And once it's over, silver prices will "break out" and head for much higher highs.

Here's why.

Europe's Banking Crisis and Silver Prices

Weak European banks are driving the current metals price pull back. The European Union (EU) reported Thursday that 16 "fragile" European banks need more capital. They're facing margin calls, much like the U.S. banks were in the fall of 2008.

But someone will come to the banks' rescue.

They'll be fixed when the European Central Bank (ECB) prints fresh batches of money and pushes them into the weakest institutions.

When that money is released into the system and the extra liquidity is sloshing around, silver will soar to new all-time highs – just like when the U.S. government bailed out banks in 2008, and the "white metal" started a tear that's led to gains of 200% to date.

If you avoid the silver market now, you'll miss out on these significant gains, like the ones headed for Coeur d'Alene Mines Corp., the largest U.S.-based silver producer.

You see, this mining giant is about to bring online some of the largest silver mines in the world. The higher silver prices soar, the more money this miner rakes in.

Simply put: Coeur d'Alene Mines shows all the signs of becoming a future silver king, and is a "Buy" before silver prices take off again. (**)

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