How Phillips 66 Partners stock performed in 2014
Should you buy pipeline player Phillips 66 Partners? (Part 10 of 12)
How Phillips 66 Partners has performed
Phillips 66 Partners (PSXP) stock prices increased almost 25% in 2014. PSXP is a subsidiary of Phillips 66 (PSX), which is a component of the Energy Select Sector SPDR Fund (XLE) and the Vanguard Energy ETF (VDE).
As noted in Part 2, successful dropdowns have been a major contributor to the companies earnings. A strong second quarter, in particular, led to the bump in stock prices, as you can see in the graph above. Stock prices reached ~$80 before subsiding to the current $62.
For more about PSXP’s 2014 earnings, read Part 7 of this series.
PSXP stock performance compared
As the graph above shows, PSXP outperformed the largest MLP ETF, the Alerian MLP ETF (AMLP), the energy sector ETF, the Energy Select Sector SPDR ETF (XLE), and the broader-market ETF, the SPDR S&P 500 ETF Trust (SPY).
Indeed, falling oil and gas prices have made investors wary about investing in the energy sector. Given XLE’s performance, rightly so. The graph above clearly shows how XLE’s stock has significantly decreased compared to SPY and PSXP.
AMLP, the largest MLP ETF, also saw a significant drop, especially later in the year. Some MLPs, including the ones comprised in AMLP, get paid in kind. As a result, these companies do experience commodity price exposure. It may have taken longer than it did to affect other parts of the oil and gas sector, but falling oil prices finally hit the MLP business too.
PSXP is spared from commodity price exposure because it generates revenues from transportation fees or tariffs, not from the commodity it transports.
Browse this series on Market Realist:
