Goldman Sachs Conviction Buy List Surprises: MLP and Coal

June 27, 2014 by Jon C. Ogg

If one brokerage firm on Wall Street can generate excitement with stocks to buy, it is Goldman Sachs. That is particularly so when the company makes changes to its Conviction Buy List. On Friday, two very unusual changes were made: a master limited partnership (MLP) and a coal company were added to the firm’s prized Conviction Buy List.

MarkWest Energy Partners L.P. (NYSE: MWE) was maintained as a Buy at Goldman Sachs, but the MLP was added to the Conviction Buy List and given a $78 price target. MarkWest closed at $70.64, has a 52-week range of $58.62 to $75.79 and has a consensus analyst target price of only $71.93. MarkWest is worth some $11.5 billion, and its distribution rate (“yield equivalent”) is listed as 5.1%.

SunCoke Energy Inc. (NYSE: SXC) is not a typical Conviction Buy List stock. The company operates as an independent producer of coke in the Americas, offering metallurgical and thermal coal for use as a raw material in the blast furnace steelmaking process. Goldman Sachs had a Buy rating but moved it up to the Conviction Buy List and assigned a $27 price target. After closing at $20.56, SunCoke has a 52-week range of $13.58 to $23.90, and the consensus price target is $25.33.

Metallurgical and thermal coal might not be as big a target in the current administration’s anti-coal push, but anything to do with coal has been a very hard sell to the investment community of late. As for risks in individual MLPs, MarkWest has diversified operations around the nation in several shale regions.

ALSO READ: Ten Cities Where Foreign Companies Create the Most Jobs

Essential Tips for Investing: Sponsored

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.