What’s next for MLPs?
Increasing production volumes, stronger energy commodity prices, and fair earnings growth in the second quarter drove MLP stocks. The Alerian MLP ETF (AMLP), which tracks 25 top MLPs, has risen more than 10% in the last three months. So far in 2018, AMLP has lagged broader markets. In this series, we’ll discuss AMLP constituents that offer the highest upside potential for the next 12 months.
Highest upside potentials
NGL Energy Partners (NGL), one of the smallest constituents of AMLP, offers the highest upside potential of 25% for the next 12 months, according to analysts. EQT Midstream Partners (EQM) has the lowest upside potential of ~16% among the MLPs listed above.
The upside offered by the above MLPs is attractive. A handsome distribution yield also makes them an alluring investment option from the total return perspective. None of the above stocks received a “sell” recommendation from Wall Street analysts.
MLPs are still in recovery mode after weakness due to strength in Treasury yields and regulatory hurdles in the first quarter. Improved crude oil prices and strong US drilling activity could continue to shape MLPs’ quarterly numbers. The trade war outcome could also be important.
Next, we’ll discuss NGL Energy Partners.