What to Buy: Capital Product Partners LP (NSDQ: CPLP)

Why to Buy Now: Capital Product Partners LP is an international diversified shipping company and a leader in the seaborne transportation of a wide range of cargoes, including oil, refined oil products and chemicals, as well as dry cargo and containerized goods.

Its vessels are chartered under medium- to long-term, fixed-rate time and bareboat charters with strong counterparties.

Although the master limited partnership (MLP) has faced significant headwinds from overcapacity in the refined-products shipping space, industry fundamentals are gradually starting to improve. Additionally, the MLP should have the opportunity for additional dropdowns of vessels from its general partner, which should further boost cash flows over time.

In fact, with a high-yielding distribution that’s largely secure, this turnaround play is starting to become a growth story once again.

It appears that management has successfully navigated through the worst of it, as the MLP’s unit price has already rebounded sharply from its low.

Although a management transition is underway, current CEO and CFO Ioannis Lazaridis is staying on until his successor is chosen, thus facilitating a smooth transition. Still, the near-term uncertainty has caused a modest decline in the unit price, thus affording an attractive entry point.

Finally, CPLP offers a welcome respite for income investors who are ordinarily leery of MLPs because of having to contend with a K-1. The MLP has elected to elected to be treated as a C corporation for tax purposes. This means investors receive Form 1099 at tax time instead of a K-1.

With a current yield of 8.8 percent, Capital Product Partners LP is a buy below 11.50.