Which MLPs Look Safe amid Crude Oil Uncertainty?



Enterprise Product Partners

In this article, we’ll look at the MLPs that Wall Street analysts expect will have attractive upsides and low commodity price exposure. Enterprise Product Partners (EPD) has a track record of consistent growth and financial discipline, and it’s expected to offer an attractive upside from here. 93.1% of analysts surveyed by Reuters rate EPD a “buy,” and the remaining 6.9% rate it a “hold.” The MLP has no “sell” recommendation. EPD’s average target price of $32.96 implies a 24.8% price return in the next 12 months from its May 4 closing price of $26.4.

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EQT Midstream Partners

EQT Midstream Partners (EQM) is a top pick among Wall Street analysts for 2017 considering its strong distribution growth guidance, low leverage, and significant expansion opportunities. The partnership has a “buy” rating from 89.5% of analysts. The partnership was last upgraded by Morgan Stanley from “equal weight” to “overweight,” which is equivalent to “buy.” It has an 18.4% upside potential from current levels.

Williams Partners

Williams Partners’ (WPZ) commodity price exposure is expected to come down significantly following the sale of its Geismar Plant and Canadian business sale. The partnership expects to generate 97% of gross margins from fee-based sources after the plant sale. Moreover, the partnership is expected to benefit from a rise in natural gas demand by LDC (local distribution companies), utilities, and LNG (liquefied natural gas) exports. 60% of analysts rate WPZ a “buy,” while the remaining 40% rate it a “hold.”

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Antero Midstream Partners

Antero Midstream Partners (AM) is among the largest distribution MLPs. The partnership currently generates 100% of revenue from fee-based resources. Moreover, the partnership has the industry-leading distribution growth guidance of 28%–30% for 2017. 93.8% of analysts rate Antero Midstream a “buy,” while the remaining 6.2% rate it a “hold.”

Cheniere Energy

Cheniere Energy (LNG) enjoys the first-mover advantage to start LNG exports from the lower 48 states. The company has already sold 87% of its capacity for seven trains sold under long-term SPAs (sale and purchase agreements). Moreover, the company is expected to benefit from the surge in LNG (liquefied natural gas) demand from the Asian and European markets and the expected boost to LNG exports under the Trump administration. The current government is bullish on LNG exports, as it is expected to create many US jobs.

86.0% of analysts rate Cheniere Energy a “buy,” and the remaining 14.0% rate it a “hold.” Guggenheim recently initiated coverage on Cheniere Energy. It assigned the stock a “buy” rating.


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