When considering any stock for your portfolio, don't be swayed by just the positives. Examine its pros and cons, and decide whether its possible upside outweighs its risks. Let's take a look at Macquarie Infrastructure (NYS: MIC) today, and see why you might want to buy, sell, or hold it.

Founded in 2004 and headquartered in New York City, Macquarie Infrastructure sports a market capitalization of about $2 billion. It's a relatively small conglomerate, with a very diverse set of businesses under its roof, ranging from aircraft parking to bulk liquid storage to environmental emergency responses to the manufacturing and distribution of synthetic natural gas and liquefied petroleum gas -- among other things. Note, too, that these items all revolve around infrastructure, which is more necessary than optional. We may put off spending on roads during some hard times, but we'll have to tend to them at some point. And other infrastructure spending, such as that on utilities, is rather defensive.

Its stock is up 71% over the past year and has averaged annual growth of about 10% over the past seven years.


Buy
One reason to admire Macquarie is its business model, since diversification can reduce risk. If one of its businesses starts cratering, odds are that its other businesses can offset much of that impact. Of course, one might argue that diversification reduces a company's ability to focus, as well. But whereas other conglomerates, such as General Electric (NYS: GE) , have very diversified operations, ranging from lightbulbs to jet engines to financial services, Macquarie is more focused on transportation and energy.

Another big draw for this stock is its dividend, which recently offered a yield of nearly 6%. Its payout ratio was recently 85%, though, suggesting that there may not be a lot of room for rapid further growth, unless revenue and earnings growth pick up.

A glance through the company's financial statements offers some more reasons to like Macquarie. Trailing annual revenue is down a mite from 2008 levels, but has been growing steadily since 2009. Net income has swung from negative to positive in recent years, as well. Free cash flow is positive, too, and has nearly tripled in recent years, topping $140 million lately.

In its 2011 annual report (link opens PDF file), management noted, "In 2011 these increased cash flows were used to fund our dividend, reduce debt at our airport services and bulk liquid storage businesses, and develop renewable feedstock sources for our gas business."

Sell
One negative for Macquarie is its long-term debt, which totaled $859 million recently, and can be a red flag, given relatively low cash levels. Still, debt is down from more than $1 billion not too long ago. Its positive and growing free cash flow bodes well for debt management. The company recently refinanced the debt of a Hawaii-based gas subsidiary.

Another concern is the stock's valuation, as its price-to-earnings ratio, at 45, is about twice its five-year average, and even its forward P/E is daunting.

If you don't like uncertainty, you might want to pay attention to Macquarie's dispute with its co-investor, International-Matex Tank Terminals. The companies are divided on how some cash is to be distributed, and Macquarie has said that settling this dispute might permit it to raise its dividend further.

Hold (off)
Given the reasons to buy or sell Macquarie Infrastructure, it's not unreasonable to decide to just hold off on it. You might want to wait for its debt to get paid down more, or for revenue to start growing faster, or for its stock price to drop some. Note, too, that the company is reporting its third-quarter results later this week, so if you're interested in it, keep an eye out for them.

You might also take a closer look at some of Macquarie's competitors, such as AmeriGas Partners  (NYS: APU) , or other conglomerates, such as Honeywell (NYS: HON) or United Technologies (NYS: UTX) . AmeriGas offers the appeal of a 7.2% dividend yield, and though its recent P/E ratio is quite high, its forward P/E is close to that of the S&P 500, suggesting that considerable growth is expected. It, too, carries a lot of debt relative to cash, though. (But it's generating a lot of free cash flow as well.)

Honeywell and United Technologies offer yields of 2.4% and 2.7%, respectively, and General Electric, which is also well worth considering, yields 3.2%. Honeywell may end up hurt by likely cutbacks in government and military spending, but its commercial operations look healthy, with a hefty backlog of orders for planes. The company is very diversified beyond aviation, too -- for example, recently introducing a laminate film that can make solar energy panels more efficient, and developing technologies to improve liquefied natural gas production. United Technologies recently bought Goodrich, boosting its presence in commercial aviation. United Tech is also positioned well to profit from emerging markets, as it already gets about 20% of its revenue from those fast-growing regions.

The verdict
I'm going to pass on Macquarie Infrastructure for now. Everyone's investment calculations are different, though, so do your own digging and see what you think. Remember that there are plenty of other compelling stocks out there.

Along with Macquarie, consider GE for your portfolio. You can learn a lot about it in our premium report on General Electric, in which our industrials analyst breaks down the company's multiple businesses. You'll find reasons to buy or sell GE, and you'll receive continuing updates as major events unfold during the year. To get started, click here now.

The article Buy, Sell, or Hold: Macquarie Infrastructure originally appeared on Fool.com.

Longtime Fool contributor Selena Maranjian, whom you can follow on Twitterhas no positions in the stocks mentioned above. The Motley Fool owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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