Roth: Buy Green Plains Partners, It's Worth $20/Share On Strong Cash Flows And Fee-Based Biz Model

In a report published Thursday, Roth Capital analyst Craig Irwin initiated coverage of

with a Buy rating and a price target of $20. Green Plains Partners is well positioned in the ethanol terminaling and storage space. The company is expected to have a stable stream of revenues and cash flows from its parent company

. The company's revenue base is also expected to grow through acquisitions in collaboration with Green Plains. "GPP's anticipated liquidity of $105m leaves ample borrowing capacity for acquisitions, in our view," analyst Craig Irwin mentioned. Green Plain Partners expects to close on a $100m credit facility shortly after the recent IPO, and retains a five-year right of first offer on any ethanol or fuels terminaling storage assets acquired by Green Plains, Inc. The partnership also does not have any direct exposure to commodity price volatility, as it does not take ownership of ethanol or other fuels transported. Also, the pricing of its contracts is not linked to the price of the underlying commodities. In the report Roth Capital noted, "GPRE has acquired over 850m gal in ethanol production since 2008, and we expect a similar tempo moving forward, which would provide a growth path for the partnership." Potential growth in transportation services or third party terminaling and storage could boost the company's future performance. "Over the 2015-2020 period, we expect distributions to grow from the minimum of $1.60 in 2015, to $1.80 in 2020," Irwin added.