as well as organic and third party opportunities to grow PSXP... CAGR of 30% thru 2018 is not a lofty goal.. at least another 3 year hold for me.. making big $$$$$$$ GLA
The sellers of PSXP think the downgrade of PSX somehow translates into PSXP's CAGR of 30% thru 2018 as not sustainable. Now that PSXP's units are investment grade, long term borrowing will be cheaper. Just hope the midstream business makes their growth projections.
Regardless, this 25% correction from the high should not be a surprise to anyone. It was overdue. IMO, the selling should be just about done. Just need strong earnings to get this moving back up again. GL
You are ignoring the Goldman Sachs downgrade of PSX as the reason for the selloff in PSXP.
No reason for PSX to dilute their equity in PSXP by using the units for an acquisition. PSXP units are investment grade status now no way they will want that lowered.
PSXP overhyped? naw, not even close. They have a lot of projects that will be shortly/just coming on stream so the DCF will get a significant bump going forward. $102 will be a low estimate once all is fully operational.
rt leaves, You could be right. I just used the lower end and would be happy to see that. For me, seeing that SHLX has a larger sponsor than PSXP, means a faster and longer growth cycle. What might be a concern is the unit dilution to help pay for the growth. I don't think it will be a huge negative but it could hold appreciation back somewhat if it is stronger than I am modeling ( 7% max). Regardless, we have another winner here and should track closely with PSXP with respect to the 2% distribution yield as this climbs higher.
After the first drop the unit price seemed to base around $44. So using that number and using the low end expectations of the next two drops (both being accretive at 30% each) this would add another $26 to the unit price. If there is any unit dilution I think it should be minimal. By year end we could see this trading $70's+. Just hope they execute their growth strategy as outlined in the CC. Also, at some point this year, I expect the Alerian MLP ETF to announce the addition of SHLX.
I think what has you confused is this: you think this is a "dividend play". If you read what SHLX says, they describe themselves as a GROWTH MLP. If they execute their growth plan as stated the pipeline business will be 4+ times bigger than today in a short time frame and so will the distributions and the unit price. Over time, just like PSXP, your original investment will some day have a pay out equal to or better than those other established MLP's you are comparing. Of course, you can always do nothing and watch where the unit price is a year from now.
I expect Alerian MLP ETF will announce placement of SHLX within 6 months. If I remember correctly that added about $15 to PSXP.. Similar move here should be the norm.
This just highlights to me how the analyst community works. Way behind the curve as most of them have a follow the crowd mind set. It is always better to do one's own research and be in front of the crowd. I noticed today that Deutsche Bank initiated coverage of PSXP with a buy and a price target of $102 (exit point for me).. SHLX should be there within 18 months or so if they execute their aggressive growth strategy. Next up for me will be Hess MLP whenever that happens. GLA
SLOWWW grower? Well let's see, I (and there has to be a lot of other people) am up almost 45% in 7 months and they have only had 1 small drop (relative to what's in the pool of potential drops). So if that is your definition of slow growth please let me know about some other slow growers.
I bought into PSXP at $29 and change and still holding. The distribution on my original investment is close to 5%... they have raised the distribution every Q. Not counting the appreciation (which is 150%+) I just wish I could find more of these slow growers.. You are just kidding us right?
Welcome aboard.. Still holding what I bought in the $29 range.. No reason to sell as I agree with the strong performance targeted by management. Once the newly acquired projects come 100% on stream distributions will increase substantially.. Patience will be rewarded..
to $49 from $47.. Nothing but upside going forward in my view. If this tracks similar to PSXP then a consistent 2% yield will be reflected in the unit price as management grows this business. GLA
I have been in PSXP since day one and their first drop was not a $1b.. SHLX has two more drop downs this year so patience will be rewarded again..GLA