Midstream Stocks: Returns and Implied Volatilities

Midstream stocks with high implied volatilities

Teekay LNG Partners (TGP) stock has risen 36.9% in the past year as of April 12, 2017. It’s the Alerian MLP ETF (AMLP) constituent with the highest implied volatility, as we saw in Part 1. In the past five days, TGP stock has fallen 1.1%.

Midstream Stocks: Returns and Implied Volatilities

The above table shows the one-year and trailing five-day returns of the stocks we’ve identified as having high and low implied volatilities (see Part 1). As you can see, high volatility stocks have moved more sharply than low volatility stocks in the past year as well as in the past five trading days.

EnLink Midstream Partners (ENLC)) was the only gainer among the midstream stocks with high implied volatilities in the past five days. Enable Midstream Partners (ENBL) has fallen the most in the past five days. On April 6, 2017, ENBL announced that it will report its 1Q17 quarterly results on May 3, 2017.

Energy Transfer Equity (ETE) has risen the most among the midstream stocks with the highest implied volatilities in the past year. In the past four quarters, ETE’s revenue has risen 13.3%, while its operating profit has risen 32.3%. Its operating profit margin is now at 8.6%.

Teekay LNG Partners (TGP) has risen the least in the past year among the midstream stocks with the highest implied volatilities. Over the past four quarters, TGP’s revenue has fallen 2.7%, and its operating profit has risen 6.0%. Its operating profit margin is 48.4% compared to the industry median of 4.9%.

Returns of midstream stocks with low implied volatilities

Among the midstream stocks with the lowest volatilities, Tesoro Logistics (TLLP) has fallen the most in the past five days. But it was the outperformer in the trailing one-year period. On April 10, 2017, TLLP announced that it will report its 1Q17 quarterly results on May 8, 2017. Analysts expect it to report earnings of $0.68 per share in 1Q17.

Remember, high short interest in a stock can reflect the market’s expectation of a large fall. Expectations of large movements in a stock can cause its implied volatility to rise.

Continue to the next and final part of this series for a detailed look at the midstream stocks with the highest short-interest-to-equity-float ratios.