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What’s Driving Williams Partners’ Strong Stock Performance?

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Jan. 19 2018, Published 12:52 p.m. ET

Williams Partners’ recent performance

Williams Partners (WPZ) has been one of the best-performing energy stocks since the start of this year. WPZ, which is the midstream MLP subsidiary of Williams Companies (WMB), has gained 11.4% in the first nine trading sessions of the year. At the same time, the Alerian MLP ETF (AMLP), which comprises 25 energy MLPs, has risen 9.3% while the broader US markets represented by SPDR S&P 500 ETF (SPY) has gained 4.1%.

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The Northeast-focused limited partnership has gained 13.5% over the past month. In comparison, WPZ’s peers Kinder Morgan (KMI), ONEOK (OKE), and Spectra Energy Partners (SEP) have lost 8.4%, 12.0%, and 4.7%, respectively. WPZ’s strong gains could be due to an increase in Northeast drilling activity, a strong rise in natural gas demand, and the timely completion of organic projects. We’ll look at the recent drilling activity and the outlook for the US Northeast region in a later part of this series.

Williams Partners’ historical performance

The partnership has gained 5.6% over the past year, thanks to the recent rally. However, Williams Partners is still trading significantly below the highs before the slump in energy prices while the US markets are trading at all-time highs. The US midstream energy sector went through its worst times at the beginning of 2016, after crude oil prices crashed to sub-$30 levels. WPZ has risen over 100% since then and outperformed the midstream energy sector, driven by a reduction in commodity price exposure and an improved financial position.

Series overview

In this series, we’ll look into Williams Partners’ fundamentals and see whether it can gain upward momentum from here. We’ll look into WPZ’s operating performance, financial position, and distribution yield. Next, we’ll look into the partnership’s valuation, technical indicators, and analyst recommendations.

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