Face it, if you are an energy investor, especially in the master limited partnerships (MLPs), this has been a very cruel summer. The Alerian MLP index is off a stunning 14% since June 1. All the chatter from the financial talking heads is negative, oil prices have plummeted, there is blood in the streets. That is exactly when it is time to consider a little buying.
A new research report from Jefferies acknowledges that things have been grim, and uncertain commodity pricing looking out the rest of this year and into 2016 is still a jump ball. However, the firm has totally reviewed the analysts’ thesis and models for the companies they cover and feels that the last half of 2015 and next year should be at least modestly constructive.
We screened the Jefferies universe for high-quality companies that are rated Buy. We also looked for companies in which the Jefferies team did not lower the price targets. Four jumped out at us.
Enterprise Products Partners
This company is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) once again, despite the energy slump, just raised its distribution by 1%. It maintains a very good long-term position in the market, and provides many of its services on the basis of long-term, fixed-fee contracts, insulating against some of the wilder swings of the commodities that it trades in.
Enterprise investors are paid very solid 5.55% distribution. The Jefferies price target is $36. The Thomson First Call consensus target is higher at $39.83. Shares closed Thursday at $27.41.