Goldman Sachs Conviction Buy List Surprises: MLP and Coal

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.

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