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Riders on the Storm: June's MLP Winners and Losers

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Part 8
Riders on the Storm: June's MLP Winners and Losers PART 8 OF 8

These MLPs Have Top Upside Potentials after June

Plains All American Pipeline

Plains All American Pipeline (PAA), the fourth-largest MLP (master limited partnership) by market capitalization, has been beaten down significantly by the recent volatility in crude oil prices. But the partnership is expected to benefit from its significant presence in the Permian Basin, its significant expansion opportunities, and its low cost of capital.

Notably, 51.9% of the analysts surveyed by Reuters have rated PAA a “hold,” and the remaining 48.1% have rated it as “buy” as of July 4. PAA’s average target price of $31.79 implies a 20.5% price return from its current price of $26.4.

These MLPs Have Top Upside Potentials after June

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Antero Midstream Partners

Antero Midstream Partners (AM) also looks attractive, given its low commodity price exposure, low leverage, and strong distribution growth guidance. The partnership recently diversified its business mix by entering into the natural gas processing business.

AM has also formed a JV (joint venture) with the MPLX LP (MPLX) for the expansion of the Sherwood Processing Facility, but this venture could increase AM’s commodity price exposure.

Notably, 100.0% of analysts surveyed have rated AM a “buy” as of July 4. AM’s average target price of $41.9 implies a 25.0% price return from its current price of $33.5.

EQT Midstream Partners

EQT Midstream Partners (EQM) is expected to benefit from the drop-down opportunities following the completion of the merger between EQT Corporation (EQT) and Rice Energy (RICE). EQM also looks attractive, given its low leverage, significant expansion opportunities, and low valuation.

EQM had “buy” ratings from 89.5% of analysts as of July 4. It has a 21.7% upside potential from its current price level.

Williams Partners

Williams Partner (WPZ), which is the owner one of the largest natural gas pipeline networks in the US, is expected to benefit from the strong natural gas demand growth forecast. The partnership also has a significant presence in the prolific Marcellus Shale and Utica Shale.

Notably, 65.0% of analysts surveyed have rated WPZ a “buy,” and the remaining 35.0% have rated it a “hold” as of July 4. Its average target price of $55.1 implies a 36.9% price return from its current price level.

Energy Transfer Partners

Energy Transfer Partners (ETP) also looks attractive, despite its relatively high commodity price exposure, high leverage, and project delays. Its appeal is due to its significantly low valuations.

For ETP, 83.6% of analysts have rated the stock a “buy,” while the remaining 16.4% have rated it a “hold” as of July 4. ETP’s target price of $29.6 implies a 44.7% price return from its current price level of $20.4.

For ongoing updates on these companies and this industry, keep checking in with Market Realist’s Master Limited Partnerships page.

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