With energy prices continuing to rise (if not soar), it is not only boosted the giant energy firms like Chevron and Exxon Mobil. In fact, one of the companies we take a look at here has seen a bigger one-year share price increase than either of those giants, though its market cap is below $5 billion and its per-share price is a third of Exxon’s and less than a fifth of Chevron’s.
All but one of the five companies in our list are organized as a master limited partnership (MLP), wherein investors purchase the partnership’s common units instead of common stock. The MLP does not pay tax on its income, as that is left to the investor-partners. That’s one reason the distributions from these companies are so high.
Another reason these energy mid-caps (market cap between $2 billion and $10 billion) have been having such a banner year is that, no matter what business they are in, that business all boils down to energy. For the year to date, energy sector stocks are trading up by nearly 46%. No other market sector is trading in the green for the same period.
The mid-cap stocks on our list all have at least an average Buy rating from the analysts covering the stock.
Crestwood Energy Partners
Houston-based Crestwood Energy Partners L.P. (NYSE: CEQP) owns and operates assets and operations in the energy midstream industry. These assets are spread among some of the biggest shale plays in the Lower 48, including the Williston and Powder River basins, the Delaware (Permian) and Barnett shale basins in Texas, and the Marcellus shale of Ohio and the northeastern United States.
The company’s market cap is $2.86 billion, and it attracts little attention from analysts. Of just eight brokerages covering the firm, though seven have a Buy or Strong Buy rating on the common units. Based on a median price target of $36.00, the upside potential on the shares is 23.3%.
Crestwood raised its distribution by $0.05 per common unit for the first quarter to $0.655. The forward yield on the units is 9.07%. The company’s payout ratio is negative for the past 12 months, because it has posted a net loss of $18.1 million over that time. On a pretax basis, excluding one-time items, Crestwood reported earnings of $87.3 million for the previous four quarters.
The 52-week trading range is $23.57 to $33.94 a share, and Crestwood’s one-year total return is 5.72%.
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