This column is for investors willing to take more risk and potentially receive more reward.  The stocks mentioned in this column are not recommended to buy or sell.  They're brought to your attention so you can investigate them further to determine if they fit your risk profile.  Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings.  And some will have tremendous stories.

February 26, 2009 - Buckeye GP Holdings L.P. (BGH-NYSE) through its general partner interests in Buckeye Partners, L.P., engages in the transportation, terminalling, and storage of refined petroleum products for integrated oil companies, refined products marketing companies, and end users of petroleum products. The company operates in three segments: Pipeline Operations, Terminalling and Storage, and Other Operations.

The Terminalling and Storage segment owns 50 terminals located in Illinois, Indiana, Massachusetts, Michigan, Missouri, New York, Ohio, Pennsylvania, and Wisconsin that provides bulk storage and throughput services and has the capacity to store an aggregate of approximately 19.6 million barrels of refined petroleum products.

The Other Operations segment includes pipeline operation and maintenance services and pipeline construction services for third parties pursuant to contractual arrangements. It owns an approximately 23-mile pipeline located in Texas and leases a portion of the pipeline to a third-party chemical company. This segment also owned approximately 63% interest in a crude butadiene pipeline, as well as owns and operates an ammonia pipeline in Texas.

In addition, it provides engineering and construction management services to chemical companies in the Gulf Coast area. MainLine Management LLC serves as the general partner of Buckeye GP Holdings L.P. The company was founded in 1986 and is headquartered in Breinigsville, Pennsylvania.

This is a limited partnership, a little different from a common stock. The main difference is that a limited partnership, in order to keep its tax status, has to pass through most of its profits to the limited partners (investors). In this way the company avoids double taxation. Only investors are taxed on their distribution income, not the company. It usually provides for higher returns to investors since the taxes normally paid to the government are avoided and passed through to the owners of the business.

With that explanation, it's understandable that the dividend is high at BGH. It should be $1.32 this year, giving a yield of 9.8% (stock is at $14.91 at this writing). So the first good thing about the stock is a great return on investment.

What caught my eye, however, was the surge in revenues over the last year. In 2006, total sales were $461.8 million, then went to $519.3 million. In 2008, they skyrocketed to $1.896.7 billion.

Earnings, however, didn't have the same enthusiasm. Still growing, they went from 9 cents a share in 2006, to 81 cents in 2007, then 94 cents in 2008. This year, analysts project $1.31, then $1.38 for 2010. Much better for this year and next.

This stock is all about oil. We've all watched the price of oil go from $143 a barrel to $34, then up to a current level of $43. It's up and down. But BGH isn't as reliant on the price of oil as the level of oil that flows through the system. As long as there is strong demand for the black liquid, BGH will do just fine. It keeps the stuff moving, no matter what its price.

The most prominent danger zone is debt. There's $1.52 billion of it or 86% of capital. If there's a problem refinancing any of it or if rates head north fast, the company will feel a real squeeze in profitability. Or worse. Keep this in mind as you do more research. That much debt can be great when rates are low and refinancing is easy. While rates are low now, with the new stimulus plan, it's hard to imagine they'll stay that way for years. And the refinancing part isn't easy right now.

More numbers: Price to sales is a low .21. Price to Book is 1.7. Operating margin for the last 12 months was 13% while Profit margin was 1.4%. Return on Equity was 11.24%. There's $102 milllion in cash, making for $3.59 a share. Book Value is $8.22. Beta is .2. The 52-week high for the stock was a year ago at $28.50. The low was on October 8 at $9.51. There are 28.3 million shares outstanding but only 10.67 million in the float. Insiders own 61.64% of the stock. Institutions have only 1.3%.

If you're looking for yield and think oil will continue to see strong demand over the next decade, spend more time with BGH. It's worth it, especially with a dividend that gives over 9%. But keep in mind the leverage here. It's remarkable.

Company Web site: www.buckeyegpholdings.com

- Ted Allrich