After a devastating sell-off that started last summer, the energy master limited partnerships (MLPs) put together an outstanding rally recently. The very strong seven-week winning streak came to an end last week as stocks pulled back 2.4%, following a 9.35% gain in the AMZX index during the streak. With many of the results from the top companies in the books, the winners and losers are being sorted out.
A new report from John Edwards and the top-notch Credit Suisse research team points to three stocks in the industry they feel are the most undervalued after everything is said and done. These three may hold a ton of upside for patient investors. We remind our readers that MLP distributions may contain return of capital.
Cone Midstream Partners
This stock has been mauled despite the company posting results that were generally in line with estimates. Cone Midstream Partners L.P. (NYSE: CNNX) is a growth-oriented MLP recently formed by CONSOL Energy and Noble Energy to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service production in the Marcellus Shale in Pennsylvania and West Virginia. The company’s assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities.
While reporting generally in line numbers and staying with guidance, the stock has been hit to the tune of 25% this year. The Credit Suisse team pointed to the fact that management also reiterated 15% to 20% annual distribution guidance the next five years.
Unitholders in this MLP are paid a solid 4.70% distribution. The Credit Suisse price target is $32. The Thomson/First Call consensus price target is $24.78. Shares closed on Tuesday at $18.55.