A prudent investment decision involves buying well-performing stocks at the right time while selling those that are exposed to risk. A rise in share price and strong fundamentals signal a stock’s bull run.
Magellan Midstream Partners, L.P. MMP is expected to perform well in the coming quarters with potential to sustain the momentum for long. So, if you haven’t taken advantage of the stock’s price surge yet, it’s time you add it to your portfolio. To the uninitiated, it is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets.
What Makes It an Attractive Pick
Price Performance: A glimpse of the firm’s price trend shows that the stock has an impressive run on the bourse so far this year. Units of Magellan Midstream have returned 2.4% year to date against the 4% decline of its overall energy sector.
Solid Rank: Magellan Midstream currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer lucrative investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Seven estimates for 2019 have moved north in the past 60 days while there was no southbound revision, reflecting analysts’ confidence in the partnership. The Zacks Consensus Estimate has inched up to $4.47 from $4.32, during this time period.
Positive Earnings Surprise History: Magellan Midstream has a pleasant surprise record. The firm outpaced the Zacks Consensus Estimate thrice in the trailing four quarters, the average beat being 4%.
Magellan Midstream Partners, L.P. Price and EPS Surprise
Magellan Midstream Partners, L.P. price-eps-surprise | Magellan Midstream Partners, L.P. Quote
Key Drivers: Magellan Midstream owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- plus tariff-based revenues. This includes the firm’s extensive refined products footprint with access to almost 50% of refining capacity in the continental United States along with imports and 85 petroleum terminals with around 100 million barrels of storage. It also comprises 2,200 miles of crude oil pipelines, aiding in ramping up the domestic output.
The partnership boasts an excellent track of rewarding its investors. It has increased its payout every quarter since its IPO in 2001. Magellan Midstream’s consecutive annual hike for 18 years is certainly a booster for its unitholders. Moreover, the partnership’s distribution yield of 7% is much higher than the energy sector’s average of 4.6%.
Notably, based on its upbeat earnings expectations, management expects to generate distributable cash flow of $1.26 billion this year (compared with the prior forecast of $1.22 billion) and is targeting annual distribution growth of 5%.
The firm forecasts higher volumes from its Longhorn, Saddlehorn and Bridge Tex projects to fuel its earnings prospects in 2019. It has also revised its full-year earnings estimates upward, buoying investors’ optimism. Further, large-scale expansion projects like Pasadena marine terminal and Houston-to-Hearne pipeline are likely to drive the firm’s results in the upcoming quarters.
Other Stocks to Consider
Other top-ranked stocks in the energy space include Antero Midstream Corporation AM, CNX Resources Corporation CNX and Phillips 66 PSX, each carrying the same Zacks Rank as Magellan Midstream.
Antero Midstream’s bottom-line estimates for the current quarter are expected to skyrocket 120% year over year.
CNX Resources’ Zacks Consensus Estimate for 2019 earnings per share has risen from 65 cents to 74 cents in the past 60 days.
Phillips 66’s 2019 earnings per share have witnessed nine upward estimate revisions with no downward movement noticed in the past 60 days.
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Antero Midstrm (AM) : Free Stock Analysis Report
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